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The past decade, with its unprecedented surge in financial activity and financial crises, has been one of increased awareness on the part of both regulatory authorities and market participants of the potential of payment systems for propagating and amplifying financial shocks, especially in a cross‐border context. This has led the European Commission to propose, on 30th May 1996, a Directive aimed at reducing systemic risk. (This has been the subject of an earlier contribution by the same author, pub‐lished in Vol 5, No 1 of the Journal.) In the meanwhile, the European Parliament has delivered its opinion and the Council has adopted a common position. This paper examines the contents of this common position.

Liquidity risk, i.e., the likelihood that a swap can be “sold” (i.e., assigned) may affect swap prices. This article addresses the importance of liquidity risk as a factor in the valuation of swaps, which are subject to default risk. The author presents a model for pricing these swaps by incorporating a proxy for liquidity risk. Using the model, the author finds that the effects of liquidity risk may partially offset the effects of default risk.

This study aims to examine the scholars’ views on the legality of bilateral rebate in Islamic financial transactions. It also aims to evaluate the contemporary application of bilateral rebate in Islamic banking operation as an alternative to the conventional mechanism in handling the events of early settlement of debt, early termination of debt facility and early withdrawal of term deposit.

The study used deductive and inductive methods to analyze the juristic literature of all the major schools of law on the legality of both bilateral and unilateral rebate in a financial transaction.

The study found bilateral rebate (ibra’ mutabadal), instead of unilateral rebate, to be the best and fairest Islamic mechanism to overcome injustice in several events that may impact the bank’s liquidity such as that of early settlement of debt facility and early withdrawal of term deposit in the sense that the interest (maslahah) of both transacting parties is equally secured.

This study has its limitation, as it only covers the applicability of bilateral rebate in Islamic banking operation. It does not include the applicability of bilateral rebate in other segments of Islamic finance such as Islamic capital markets and Islamic insurance (Takaful business).

This paper has practical implication for Islamic banking industry particularly with regard to its liquidity management in the event of early settlement of a debt facility, early termination of an Islamic facility and early withdrawal of Islamic term deposit. It may also assume policy implication in the event that the regulator adopts the legality of bilateral rebate in its Islamic banking policy and guidelines.

This paper offers an Islamic alternative to the conventional mechanism in handling the event of early settlement of a debt facility, early termination of an Islamic facility and early withdrawal of Islamic term deposit. Under conventional banking, there are certain fees and charges imposed on customers in the above events like early settlement charge and early withdrawal charge. Unlike its conventional counterpart, Islamic banks cannot opt for the conventional method that seems unjust to the customers as the charge is imposed without Sharīʿah basis. In this case, bilateral rebate serves as a fair mechanism to manage the bank’s liquidity in the aforementioned events.

The purpose of this paper is to investigate the state of integration of securities market infrastructure in Europe.

Given the lack of quantitative and price‐based measures, this paper adopts a rather qualitative approach to evaluating the degree and evolution of integration in the securities market infrastructure within Europe. Future challenges, policy options for regulation and market design are discussed.

Despite its single currency, the euro area securities infrastructure remains highly fragmented due to cross‐border differences in tax regimes, procedures, laws, and vested interests. Cost savings and increased efficiency can be expected from further integration.

This is the only paper which provides a comprehensive and comparative analysis of the current level of integration of the securities infrastructure in the euro area and its implications for regulation and market policy.

The purpose of this paper is to provide a framework of replication pricing of derivatives and identify funding valuation adjustment (FVA) and credit valuation adjustments (CVA) as price components.

The authors propose the notion of bilateral replication pricing. In the absence of funding cost, it reduces to unilateral replication pricing. The absence of funding costs, it introduces bid–ask spreads.

The valuation of CVA can be separated from that of FVA, so-called split up. There may be interdependence between FVA and the derivatives value, which then requires a recursive procedure for their numerical solution.

The authors have assume deterministic interest rates, constant CDS rates and loss rates for the CDS. The authors have also not dealt with re-hypothecation risks.

The results of this paper allow user to identify CVA and FVA, and mark to market their derivatives trades according to the recent market standards.

For the first time, a line between the risk-neutral pricing measure and the funding risk premiums is drawn. Also, the notion of bilateral replication pricing extends the unilateral replication pricing.

This paper aims to examine the prospects of a dispute resolution framework for the Islamic banking industry in Tanzania under the existing legal framework.

This paper is based on comparative study by drawing significant lessons from other jurisdictions, and argues that to avoid some of the initial drawbacks in the dispute resolution framework for Islamic banking transactions in more advanced jurisdictions like Malaysia and United Kingdom, it is important for Tanzania to get it right from the onset to effectively manage Islamic banking disputes.

The study finds that apart from the court system which provides the main avenue for Islamic finance litigation, other processes such as arbitration and mediation which are deemed to be more sustainable could also be developed for effective dispute management.

The study focuses on Tanzania banking system with comparison to other jurisdictions.

An increase of Sharī’ah-compliant products in Tanzania has led to the establishment of a number of Islamic banks. This study demonstrates the need for Tanzania to make use and/or make adjustment of its laws for effective dispute settlement of banking-related disputes.

This study appears to be the first paper to draw significant experiences from other jurisdictions to resolve Islamic banking disputes in Tanzania. It is expected to provide a good policy framework for the stakeholders in the Islamic banking industry in Tanzania.

This paper aims to investigate the current regulation of ibrā’ (rebate) set by the Central Bank for the Islamic banks in Malaysia and how far its original concept has been compromised to make it adaptable to the modern financial system.

This study, with regard to practising ibrā’ in Islamic banking in Malaysia, is qualitative in nature, using semi-structured interviews carried out with two types of informant: members of either the National Sharīʿah Advisory Council (NSAC) or the Internal Sharīʿah Committee (SC). All data are analysed based on the content analysis method.

The findings reveal that while stipulating an ibrā’ clause makes practising ibrā’ stray from its original concept, it has successfully tackled the current problem. However, the long-term consequences should be a concern, particularly Islamic banking products, which have been significantly influenced by the conventional system, including interest rates and the debt structure, neither of which should be identified with Islamic banking.

This study is limited because it focusses on the practice of ibrā’ in Malaysian Islamic banking. Moreover, data are collected from nine interviewees from NSAC and SC from different Islamic banks. Thus, the results cannot be generalised to other countries.

This paper provides a fresh discussion of ibrā’ from the perspective of regulators and the experience of practitioners in Malaysia, particularly in respect of aspects of Sharīʿah and current actual practice.

Companies all over the world have recently started to adopt supply chain finance (SCF) solutions in their supply chains to reduce the payment defaults and simplify the bill settlement process. The purpose of this paper is to identify and prioritize the barriers to adopting SCF in micro, small and medium enterprises.

It employs a three-phase methodology to identify and prioritize the essential barriers to the implementation of SCF. An extensive survey has been carried out in 101 Indian MSMEs in India which identified 37 barriers under six heads in the first phase. Experts’ interview using the Delphi technique has been carried out in the second phase to finalize the barriers. The analytic hierarchy process methodology, with sensitivity analysis for validation, is used in the final stage to prioritize and rank the barriers.

Results show that financial and information technology barriers are prominent in SCF adoption followed by financial challenges. Among specific barriers, the disclosure of sensitive company information to competitor barrier acts as an essential barrier followed by poor technological capability of MSMEs.

The study is limited to SCF adoption of MSMEs in a developing nation. Extensive research is required in order to derive a global trend.

The current research contributes to the stakeholder theory and transaction cost economics. Observations made in the current research can encourage organizations to incorporate stakeholders’ concerns into the adoption of SCF solutions. The study provides a more in-depth view of such challenges and a benchmark, which will help companies to adopt SCF solutions more effortlessly. Moreover, policy makers across the world can explore these serious issues and amend or introduce new policies to facilitate companies’ implementation of supply chain financial solutions.

To the best of the authors’ knowledge, this is the first study which identified and prioritized SCF adoption barriers of MSMEs in a developing nation. This study is also novel in adopting a hybrid analytical hierarchy process-sensitivity analysis for ranking the SCF barriers in an MSME context. SCF studies often emphasize only on the reverse factoring aspect of SCF. The current study considers many innovative aspects of SCF, such as pre-shipment financing, dynamic discounting, inventory financing, collaborative logistics, etc.

The purpose of this paper is to explore the development of Islamic home financing and some of its practical issues. In addition, the study also intends to draw attention to some recommendations to the issues highlighted from the viewpoint of industrial experts.

The methodology for this study follows the qualitative research approach which aims to capture the thoughts and extensive knowledge of a few related experts in the field. Eight respondents who are mainly scholars and bankers in Islamic banking were selected for the interview purpose. A semi-structured interview was adopted to investigate a series of themes concerning the Islamic home financing in Malaysia.

In terms of development, the findings showed that a majority of the participants agreed that the Islamic banking and finance (IBF) is developing in line with its counterpart – the conventional banks. This is due to its innovation in products as well as offering a variety of financial products including home financing. Some of the practical issues highlighted by the respondents include pricing, adherence to conventional framework and interest rate movement. Islamic home financing is argued to be much more expensive and faces difficulty in working within a conventional framework. The issue of interest rate movement is also becoming a major hurdle in Islamic banking due to the absence of a proper benchmark for IBF. At present, IBF still follows the benchmark set by its conventional counterpart. Furthermore, the respondents also believed that the product of home financing, together with other financial products, are not in line with the teaching of Shariah principles and guideline. In addressing those issues, the respondents provided some suggestions to counter those problems, which include promoting Islamic home financing, particularly in terms of Musharakah Mutanaqisah (MM), ensuring the transparency of products, strengthening due diligence, legal aspect and others.

This study is limited in terms of the relatively small number of respondents used to generate its findings. Time constraint is another limiting factor of the research. Additionally, potential respondents in a higher position were unable to take part in the study. Due to these factors, the generalisation of the study’s findings will be visibly restricted.

This paper is expected to generate several practical implications. Firstly, the study’s exploration of the issues surrounding home financing will likely provide a general overview of the recent development in Islamic banking and the challenges it faces. Consequently, this will indirectly help policymakers and bankers alike to design a better policy when dealing with Islamic home financing issues. In the review of various literatures in the field, a majority of research studies were observed to mainly focus on a quantitative approach. Hence, in terms of methodological innovation, the study’s use of qualitative inquiry based on an interview method may provide a deeper understanding of the matter. The resolutions proposed by the various experts are hoped to contribute to shaping a better framework and system in Islamic and conventional home financing in Malaysia.

Despite having many literatures revealing mixed results concerning Islamic home financing, especially the Bai Bithaman Ajil and MM, addressing the issues of Islamic home financing, particularly from an expert perspective, has been lacking. The majority of research studies claim those issues from a theoretical viewpoint rather than a practical one. With this gap and lack of initiative, the current study is motivated to undertake an in-depth analysis on the issues of Islamic home financing and how to address those arising issues from an industrial expert’s point of view via a qualitative approach.