INTERNATIONAL ISLAMIC UNIVERSITY MALAYSIA

COURSE OUTLINE

Kulliyyah

Economics and Management Sciences

Department

Department of Finance

Programme

Bachelor of Science In Islamic Finance (BSIF)

Name of Course

Foundation of Islamic Finance

Course Code

ISF 1101

Assoc. Prof Dr. Dzuljastri Abdul Razak Office : A 408 Phone : 03-6196 4762 Email : dzuljastri@iium.edu.my

Name (s) of Academic staff / Instructor(s)

Assoc. Prof. Dr. Salina Hj. Kassim Office : A 208 Phone : 03-6196 4613 Email : ksalina@iium.edu.my Dr Nor Azizan Che Embi Office : A 415 Phone : 03- 61964739 Email : izanebbm@yahoo.com

Rationale for the inclusion of the course / module in the programme

This course prepares the students with the knowledge in understanding the foundation of Islamic banking and finance. It familiarizes the students with the roles of IBF in the context of the financial industry today as well as the overall setting and concepts of the Islamic banking and finance.

Semester and Year Offered All semesters

Status Level Proposed Start Date Batch of Student to be Affected

Core Undergraduate Semester 1, 2011/2012

Face to Face Assessments

Total Guided and Independent Learning

42 Credit Value (hours) Pre-requisites (if any) Co-requisites (if any) Nil 3

81

Others

Total Student Learning Time (SLT)

Lecture

128

The objectives of this course are to: 1. Course Objectives 2. 3. To provide a conceptual understanding of Islamic banking and finance. To enable the understanding of how Islam and its worldview relates to the aspect of banking and finance. To familiarize students to the main concepts in Islamic banking and financial institutions and markets.

At the end of the course, the students should be able to: 1. Explain the differences between Islamic banking and finance and its conventional counterpart by being able to identify and explain the distinguishing features of Islamic banking and finance. 2. Explain the overall financial infrastructure of the Islamic financial system as well as the bodies governing the system. 3. Explain the major concepts in Islamic banking and finance, particularly the major Islamic financial instruments used by the

Learning Outcomes

Islamic financial institutions. 4. Appreciate the virtues of Islamic banking and finance above that of its conventional counterparts.

Transferable Skills:

Students are required to form groups to discuss and complete a term paper on specific topics on Islamic Banking and Finance. By completing the exercises the students should develop leadership skills, time management and analytical thinking skill as well as ability to process information to evaluate situation. Type of Assessment Assignments/Term Paper Description Independent study, group discussion In-class discussion

Teaching-Learning / assessment strategy

Lectures

Course Synopsis

This course introduces the students to the basics of Islamic banking and finance. It familiarizes the students with the overall setting and concepts of the Islamic banking and finance. To enable students to appreciate the major differences between Islamic and conventional banking and finance, the course starts with the understanding of the Islamic worldview and relates it to the context of banking and finance. The course also focus on the issue of riba, its definition, the various forms that it takes and the misunderstandings on riba that lead to the confusion in its identification. Students will be familiarized with the Islamic banks operational procedures and the basic modes of Islamic financing in Islamic banking and finance. Students will also be exposed to the Islamic financial markets, including the sukuk and Islamic equity markets. Some basics of the Islamic insurance will also be discussed. The course ends with the discussion on the regulatory bodies governing the functioning of the Islamic banking and financial markets. Lecture, Class Discussion, Reading Assignment

Mode of Delivery

Assessment Methods and Type/Course Assessment

LO 1,4 1,2,4 1,2,3,4 1, 2,3

Method Group Assignments (1 and 2) Presentations (1 and 2) 2 Tests Final Examination TOTAL

% 20 10 30 40 100

Mapping of course / module to the Programme Learning Outcomes Learning Outcome of the course Explain the differences between Islamic banking and finance and its conventional counterpart by being able to identify and explain the distinguishing features of Islamic banking and finance. Explain the overall financial infrastructure of the Islamic financial system as well as the bodies governing the system. Explain the major concepts in Islamic banking and finance, particularly the major Islamic financial instruments used by the Islamic financial institutions. Appreciate the virtues of Islamic banking and finance above that of its conventional counterparts. Programme Outcomes
01 02 03 04 05 06 07 08 09

1.

2.

3.

4.

Content outline of the course / module and the SLT per topic Weeks Topics Learning Hours Task/Reading
(author/page)

1&2

Islamic Worldview and Its Implication on Banking and Finance The Islamic worldview Islamic Economics: definition and scope The maqasid al-shariah Implications of Islamic worldview on banking and finance Basic Prohibitions and Business Ethics in Islamic Economics and Finance The basic prohibitions: riba, gharar and maysir Islamic business ethics and norms Philosophy of Islamic Finance Salient features of Islamic finance Types of contract 1st TEST

10 Haneef (1996)

Ayub (2008); Iqbal and Mirakhor (2007)

Ayub (2007) p.73-96

History and Development of Islamic Banking and Finance around the World Performance of Islamic banking and finance in general Performance of Islamic banking and finance in Muslim countries Performance of Islamic banking and finance in nonMuslim countries Focus: Development of Islamic banking and finance in Malaysia Assignment 1: Development of Islamic Banking and Finance in Selected Countries (Report and Presentation)

10

Haron & Azmi (2009)

Basics of Islamic Financial System Definition and characteristics of the Islamic financial system Islamic versus conventional financial system Participants in the Islamic financial system Major Islamic financial system instruments: how they are being priced, issued and traded Islamic Banking Operational Procedures and Mechanisms Objectives and business philosophy of Islamic banks Operational principles of Islamic banks Sources of funds Basic modes of Islamic financing: types of financing 2nd TEST Basics of the Islamic Capital Market Capital market in the Islamic framework Sukuk and related issues Islamic stock markets

7
Haron and Azmi (2009)

7&8

10

Haron and Azmi (2009)

9&10

9
Ayub (2008)

11&12

Islamic Insurance Philosophy and principle concept of takaful Operational concept Types of takaful Assignment 2: Islamic Banking Products (Report and Presentation) Regulation of Islamic banking and finance The role of the Shariah Advisory Council The role of the Central Banks and Securities Commissions International supervisory institution: IFSB, AOFII Regulatory Issues of Islamic banking and finance Assignments Mid-term Term paper Presentation Final exam Required references supporting the course

8
Ayub (2008); Haron and Azmi (2009)

13&14

9
Haron and Azmi (2009)

10 8 10 6 13

Haron, Sudin and Wan Azmi, Wan Nursofiza. (2009). Islamic Finance and Banking System. Kuala Lumpur: McGrawHill. Ayub, Muhammad. (2007). Understanding Islamic Finance. UK: John Wiley. Bala, Gupta and Khir (2008), Islamic Banking A Practical Perspective Haneef, M. A. (1996). Islam, the Islamic worldview and the methodology of Islamic economics. Journal of Islamic Economics & Management, 1(1).

Recommended references supporting the course Iqbal, Zamir and Mirakhor, Abbas. (2007). An Introduction to Islamic Finance: Theory and Practice. UK: John Wiley. Pramanik, A. H. (2007). Islamic Banking: How Far have We Gone? Kuala Lumpur: IIUM Publishing. Zaharuddin (2010) Contracts & The Products of Islamic Banking CERT Publications Sdn.Bhd

Guidelines for Assignments Form a group of 5 students to do the following two assignments after which your group have to make a presentation on Week 5 and Week 12 respectively 1. Development of Islamic Banking and Finance in Selected Countries Chose one country that is involved in Islamic Banking and Finance (IBF). Write a 5 page report on the background and recent developments of IBF in that country 2. Islamic Banking Products Chose one Islamic banking deposit or financing product. Compare the features of this product as offered by three (3) Islamic banks. Comment which one of the 3 banks product features are most attractive and marketable. Structure of Report Report should be typewritten on A4 size paper using 12 points-time roman with 1.5 1 inches margin on all sides. Students should be aware of plagiarism. Thus, the authors and sources should be acknowledged on the footnotes and rfrences.

At the end of the programme, students are able to: 1. 2. 3. 4. 5. 6. 7. Use the necessary learning skills in information management and apply effective strategies for lifelong self-improvement. 8. 9. Demonstrate familiarity with established concepts and practices in the field of Department of Finance and awareness of current development therein. Use relevant skills learnt in Department of Finance for professional and personal development. Cooperate with others and apply knowledge in a socially responsible manner for the progress on the nation and the ummah. Demonstrate commitment to ethics, autonomy, professionalism and Islamic values in the workplace and everyday life. Communicate with people from a diverse range of backgrounds with empathy. Knowledge Practical Skills Social skills and Responsibilities Value, Attitudes and Professionalism Communication Problem Solving and Scientific Skills Information Management and Lifelong Learning Skills Managerial and Entrepreneurial Skills Leadership and Team Skills

Analyse issues and demonstrate skilfulness in planning, executing and evaluating strategies and action plans

Apply basic managerial and entrepreneurial skills in relevant fields. Understand the different type of leadership styles and the demonstration of interpersonal skills when leading in a group situation