MAEF710 ISLAMIC FINANCE CONTRACTS

Course Description:

The course aims to clarify the theory of the different modes of finance, addressed by scholars both in the past and present on one hand, and contracts and financial issues arising from the development and practices of Islamic finance industry and its institutions on the other. The module will explore nominated financial contracts as explained in Islamic jurisprudence, and the derived or structured financial instruments that were developed as a result of the need for financial inter-mediation from an Islamic perspective.

Course Code: MAEF710

Credit hours: 3

Pre-Requisites: None

Learning Objectives:

Students will conduct a case study and present their findings and analysis on contracts represent certain modes of finance.
Students will write an essay highlighting the main differences between different modes of finance in the Islamic Finance system.
Students will list the five major Islamic mortgage companies in the US and their several modes of finance.
Students will analyze the criteria required for eligibility for dealing with the secondary market in the US by selling contracts to Freddie Mac, and how Sharia-compliant this practice is.
Students will recognize the difference between the contract that is not sellable in the secondary market versus the one that is sellable, as far as Sharia compliance is concerned.
Students will learn why Islamic mortgage contracts in the US are too long and too detailed.

Course Outline:

An analyzing thoroughly one contract for each mode of finance, as follows:

1- Equity-Based:

Mudharabah
Musharakah
Diminishing Musharakah

2- Debt-Based:

Murabahah
Ijarah
Istisnaa
Salam