Regulation and Governance of Islamic Finance

This module aims to offer students a useful background on the importance of banking regulation and consequences of imprudent banking behaviour through reference to past banking crises and the present global economic recession. The module explains the regulatory goals of Islamic finance, built-in stabilisers in Islamic finance and corporate goverance provisions of AAOIFI Shariah standards. It introduces student to the nature of banking risks and how international regulatory measures evolved through Basel I, Basel II up to the present time to pursue prudent banking behaviour.

Optional

None

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The importance of prudent banking regulation Lessons from the present global financial recession Regulatory goals and built-in stabilizers of Islamic finance Banking risks and the international regulatory challenge Corporate governance for Islamic financial institutions Rising challenges and future horizons for Islamic banking regulation

Knowledge and Understanding

On successful completion of this module students should be able to:

l. Develop acumen in appreciating the regulatory challenge facing Islamic banking within the global context

2. Appreciate banking intermediation and economic health and the regulatory lessons to be learnt from past bank failures

3. Understand the causes of the present global financial recession and the current treatments and regulatory concerns

4. Understand the regulatory goals and built-in stabilizers of Islamic banking

5. Appreciate the role of banking and financial market risks in the evolution of international regulatory standards

6. Understand the principles, mechanisms and tools of corporate governance, Shariah standards on corporate governance, challenges and current debate on Islamic banking regulation.

Each student should participate in 150 hours of effort, including lecturers (6 hours), seminars (6 hours), tutorials (6 hours), plus personal guided study

Examination                             30%

One assignment of 2,500 words  60%

Presentation                              10%

1. Archer, Simon & Karim, Rifaat ‘ Islamic Finance: The Regulatory Challenge; Chichester: John Wily; 2007
2. Caprio, Gerard Evanoff & Kaufman, George ‘Cross-Boarder Banking: regulatory challenges; London: World Scientific Publishing; 2006
3. Chapra, Umar and Habib Ahmed, Corporate governance in Islamic financial institutions, , IRTI, IDB, Jeddah, 2002.
4. Charles Goodheart and Gerhard Illing, ‘Financial Crisis, Contagion, and the Lender of Last Resort’, Oxford Press, 2002.
5. Subbulakshmi, V ‘Islamic Finance: Regulatory perspectives’ ; Hyderabad: ICFAI University Press; 2004
6. Mishkin, Fredric S & Stanley G. Eakins, ‘Financial Markets and Institutions’, Addison Wiley, 2000.
7. Mishkin, Fredric S ‘Prudential Supervision: What Works & What Doesn’t’; 2001, NBER.
8. AAOIFI: ‘Accounting, Auditing & Governance Standards; Bahrain; 2009.
9. Spencer, Peter D., ‘The Structure and Regulation of Financial Markets’, Oxford University Press, 2000
10. Tew, Brian, ‘Evolution of International Monetary System 1945 – 1981’, Hutchison, 1982