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The purpose of this paper is to propose a financial instrument by combining two main contracts in Islamic finance with the aim to minimize risks involved in Islamic venture capital (IVC) activities.

A mathematical model and explanatory figures are provided to see how IVC firms can benefit from the combination of “Ijara” contract and “Diminishing Musharaka” contract to provide financing for start-up and high-tech companies.

The proposed instrument could be considered as an alternative solution for IVC firms. It represents a low level of risk with a stable income in the beginning of the project. In addition, it allows benefiting from the possible development of start-up and high-tech companies with a smooth exit from the capital of the financed company without the intervention of another investor. It is also considered as a motivational instrument for the entrepreneurs, because it allows benefiting from a grace period on the one hand and from a lower cost of financing compared to other type of funding on the other hand.

Some studies have concentrated on identifying and understanding the concept, the operation and the challenges of IVC industry. The study is considered among few studies that provide a practical model for IVC firms, which takes account of the different stages of venture capital process. The instrument can promote the development of IVC firms and give alternative financing opportunities to Muslim entrepreneurs.

The current model provides a truly revolutionary solution for young Muslim entrepreneurs who do not accept to be financed by the proposed instruments of venture capital (VC) firms such as convertible bonds and warrants. On the other side, it provides an alternative solution for IVC firms to the already offered products such as “Musharaka”, “Mudharaba” and “Wakalah” contracts. An expert in “Fiqh Al-Muamalat” (Islamic law of transaction) assessed the Sharia compliance of the model.

Arafat and Rabin's famous handshake opened a new stage in the Middle East peace talks. Recent delays in the process have centered more around economic than political issues. Two main controversies revolve around means for distributing aid funds and the development of viable financial networks in the Israeli Occupied Territories. These agenda are reviewed from the viewpoint of promoting U.S. trade interests in the region. Islamic banks, if they are granted licenses by the Israeli government, may provide an effective means for distributing funds, while at the same time promoting U.S.‐Arab mercantile trade.

This paper aims to draw upon existing debate over “financial sector rent” (bank rent) to analyze the current pattern of financing of Bangladeshi and Indonesian Islamic banks during the period of 2011 and 2015.

The empirical evidence through a comparative approach of analyzing the performance of Islamic banks with that of conventional banks in respective countries – two of the largest countries where majority of the population are Muslims – is drawn to demonstrate the objective.

While Islamic banks in Bangladesh are primarily concentrating on the murabaha (mark-up contract) mode of financing, some transactions under musharaka (partnership/equity-based contract) are observed in the Indonesian Islamic banking sector. This anomaly in Indonesia can be explained by the nature of their musharaka financing which is not of the purely “participatory” financing type. As a result, we can observe the quasi-murabaha syndrome in Indonesian Islamic banking sector. The concentration of asset-based financing including consumers’ financing (hire purchase) in the credit portfolio gives Islamic banks relatively higher Islamic bank rent opportunity for protecting their “franchise value” as Sharīʿah-compliant (Islamic law-compliant) lenders. However, Indonesian Islamic banks share a still infant Islamic banking market, and enjoy less rent opportunity under a severe competition with conventional banks.

The bank rent approach suggests that the syndrome observed both in Bangladesh and Indonesia can be ironically justifiable. Moreover, the mode of profit-and-loss sharing provides, in practice, an idea of the difficulty in managing the participatory financing embedded with high credit risk. Under this scenario, it is necessary for Islamic scholars and the regulatory authority to design an appropriate financial architecture, enabling Islamic banks to avail the benefit from a wider variety of Sharīʿah-based Islamic financing.

This paper expands the newly emerged concept of “Islamic bank rent” to make sense of the murabaha syndrome in Bangladesh and the quasi-murabaha syndrome in Indonesia. This approach also contributes to clarifying the unique risk and cost to be compensated with the spreads that Islamic banks are expected to earn.

This paper aims to explain the “murabaha syndrome” of Islamic banks. It further attempts to offer alternatives for the expansion of profit and loss sharing (PLS)-based financing.

Audited financial statements of 18 Islamic banks in the GCC countries are analyzed to assess the financing structures of banks. Moreover, additional data about financing pattern of Islamic banks in other Muslim majority countries are collected from the Islamic finance literature. A comparative analysis is offered to examine the financing structures of Islamic banks.

The paper confirms murabaha (mark-up financing) concentration of Islamic banks. About 90 per cent of the total financing are concentrated on murabaha, which is the result of existing institutional underpinnings. Islamic banks would logically be involved with PLS-based financing only limitedly unless the current governing institutions are changed. Entrepreneurs’ financing needs based on PLS contracts should be catered by venture capital, whereas micro-finance enterprises can meet the demand for funds of marginal clients.

PLS investment in the portfolio of Islamic banks would result in higher risk and uncertainty. Ambiguity, or its equivalent uncertainty, is prohibited in Islam. This is a dilemma which the existing literature does not sufficiently explain.

Ideally, Islamic banks should practice PLS-based financing; otherwise, their raison d’être would be difficult to justify. Islamic finance literature does not shed sufficient analytical lights in explaining Islamic banks’ preference of mark-up financing to PLS-based financing. Moreover, strategies to ameliorate this condition have largely remained unexplored.

This study aims to propose a productive waqf-based financing model for the livestock sector by optimizing idle waqf land owned by Islamic boarding schools (pesantren) for livestock breeding and fattening projects. Most pesantrens are established on waqf land and are located in rural areas with great potential for implementing waqf-based livestock projects.

The authors conducted a critical review on the models of waqf-based empowerment and financing for the livestock, agriculture or agribusiness sectors. Then, a proposed model was designed focused on livestock sector by using waqf land owned by pesantren. To strengthen the proposed model, the authors held a focus group discussion (FGD) by inviting regulators, academics, practitioners/consultants in animal husbandry, waqf, pesantren and economic empowerment.

Pesantren as nazhir of waqf land can cooperate with baitul maal wat tamwil (BMT) acting as nazhir of cash waqf to form a breeders’ cooperative as the vehicle to carry out the process of producing and fattening cattle. The project is performed under a mudharaba, musharakah or ijara contract, which is supervised by pesantren and BMT.

This research is based on the Indonesian context due to it is influenced by country-specific conditions. Even so, some of the findings in this study can still be adopted by waqf asset managers in other Muslim countries, which also have potential in terms of the number of pesantren and waqf assets.

The proposed model can improve the quality of life of the poor in remote areas by fulfilling the demand for beef consumption accompanied by sustainable economic empowerment.

This research focuses on solving the problem of meeting basic needs for beef by optimizing productive waqf in the livestock sector by involving the role of pesantren, which still needs to be discovered in the literature on the use of waqf land.

The purpose of this paper is to focus on various modes of Islamic finance and examines their risk and other characteristics by conducting a selective literature review.

Due to the Islamic prohibition of interest and in compliance with injunctions on permissible trade contracts, the savings and investment contracts offered by Islamic banks have a different risk profile than those of conventional banks. This gives rise to a number of regulatory issues pertaining to capital adequacy and liquidity requirements. Operational issues also arise as Islamic banks are limited in their choice of risk and liquidity management tools such as derivatives, options and bonds. All these issues are theoretically examined and various performance indicators of two Islamic banks are also examined to compare them with traditional banks that practice mark up pricing.

The balance sheets and various performance indicators show that there is evidence that Islamic banks in Pakistan tend to engage in little long‐term project financing. However, on the plus side these banks have shown good performance with respect to the returns on their assets and equity and have also demonstrated better risk management and maintained adequate liquidity.

A larger set of banks across various countries needs to be examined before any substantive conclusions can be reached about the relative performance of Islamic versus conventional banks.

These largely pertain to central bank prudential regulations which must ensure that a level playing field is created for Islamic banks to compete with traditional banks.

The paper is a commentary on the risk characteristics of Islamic banks and also analyzes for the first time the performance of the only two purely Islamic banks currently operating in Pakistan.

The presence of securities crowdfunding (SCF) FinTech in the Islamic financial landscape opens investment opportunities through shares and sukuk (Sharia bond) instruments. This study aims to examine the effect of investment risk (IR), legal risk (LR), product knowledge (PK), Sharia compliance (SC) and subjective norm (SN) on investment decisions in businesses and projects run by small and medium enterprises (SMEs).

The questionnaires were distributed to prospective investors with prior knowledge of SCF and Islamic investment. The data collected was then examined using partial least square-structural equation modeling using SmartPLS 4.0.

The results show that LR has positive and significant implications for supporting investment through SCF, while IR has the opposite. The main findings in this study explain that PK and SC are proven to strengthen the intention to invest in SCF. Meanwhile, SN, which also strengthens intention, is the greatest influence. Therefore, it is highly recommended that SCF organizers collaborate with regulators (OJK), universities, academics and the investor community, as well as Muslim entrepreneurs, to provide education and literacy regarding SCF products and the underlying contracts, along with the consequences and uniqueness of investment vis SCF.

From a managerial side, Sharia expert educators can be appointed to increase investors’ literacy and confidence to support SMEs’ business expansion via SCF. In addition, to minimize investment risk, SCF organizers are also advised to issue sukuk and shares in different low-risk businesses/sectors, followed by investment amounts that are more affordable for novice investors.

Research on SCF as an alternative to SME financing is still scarce. To the best of the author’s knowledge, this is the first research to empirically test the relationship between risk, SC, PK and SN on potential investors’ decisions to support SMEs through the SCF mechanism.

The comparative analysis of the characteristics of both crowdfunding and Islamic finance shows that there is little divergence between these financing tools. In fact, an “Islamic crowdfunding” has recently emerged, with activities in several countries, despite a conceptual status which has to be confirmed because of the absence of consensus about its exact name. Meanwhile, platforms of “Islamic crowdfunding” are quite heterogeneous as far as the proposed financing type and the reference to Sharia are concerned.

To vindicate whether or not there are signs of social and developmental role in the current practice of Islamic banking in Sudan, a criterion required by the rules guiding the Islamic circulation of money and investment.

The objective of the paper is to draw attention to this important, but neglected aspect of Islamic finance, by assessing some indicators of Islamic banking in Sudan such as: the geographical distribution of Islamic banks (ISBs), short vs long‐term investment, credit by modes of financing used, sectoral distribution of financing, role in poverty alleviation, harmonization of the Shari’aa rules with economic thinking to cope with today's modern and global world development constraints, and the developmental role of ISBs within globalization.

Many banking indicators in Sudan are signs of the weak size of the financial sector and financial liquidity, low confidence in the banking system, and low and poor credit performance. Banks are also characterized by unti‐developmental signs of regional inequality of distribution of branches, use of sales modes; uneven, short‐term and modern‐sector‐biased distribution of investment, high share of demand deposits and shortages of long‐term funds.

The developmental role of ISBs needs to entwine economic development with social development by gearing production priorities towards common needs, via specialized branches, partnership modes, short and long term investment plans. It also requires the renewal of fiqh in the course of Ijtihad to devise new rules, or to change rules in accordance with globalization, and harmonization of economic and fiqh thinking.

The analysis here is valuable in drawing attention to Islamic banking practitioners that the link between Islamic finance and development objectives (including social development) is still under trial, and some work needs to be undertaken despite the many years which have elapsed since the introduction of Islamic finance.

This paper aims to evaluate the credit risk of Islamic and conventional banks and its relationship with the capital in 14 countries of the Middle East and North Africa region. To do this, a sample of 58 Islamic banks and 89 conventional banks during the 2005-2015 period was used.

In fact to measure the difference between Islamic banks and their conventional counterparts in terms of credit risk, the generalized method of moments is used.

The results showed that the conventional model has a higher credit risk than the Islamic one. These results also showed that the larger an Islamic bank is, the higher its credit risk will be to get closer to that of conventional banks.

This investigation is based on actual data for each bank available in the Bank-Scope database provided by the Van Dijik office (2013). It should be noted that almost all the recent empirical studies interested in the world banking sector essentially use this database.