New Issues in Islamic Finance and Economics: Progress and Challenges New Issues in Islamic Finance and Economics: Progress and Challenges Hossein Askari, Zamir Iqbal, and Abbas Mirakhor JohnWiley&Sons(Asia)Pte.Ltd. Copyright©2009byJohnWiley&Sons(Asia)Pte.Ltd. Publishedin2009byJohnWiley&Sons(Asia)Pte.Ltd. 2ClementiLoop,#02-01,Singapore129809 Allrightsreserved. No part of this publication may be reproduced, stored in a retrieval system, or transmittedinanyformorbyanymeans,electronic,mechanical,photocopying, recording,scanning,orotherwise,exceptasexpresslypermittedbylaw,without either the prior written permission of the Publisher, or authorization through payment of the appropriate photocopy fee to the Copyright Clearance Center. RequestsforpermissionshouldbeaddressedtothePublisher,JohnWiley&Sons (Asia)Pte.Ltd.,2ClementiLoop,#02-01,Singapore129809,tel:65-6463-2400, fax:65-6463-4605,e-mail:[email protected]. Thispublicationisdesignedtoprovideaccurateandauthoritativeinformationin regard to the subject matter covered. It is sold with the understanding that the publisherisnotengagedinrenderingprofessionalservices.Ifprofessionaladvice or other expert assistance is required, the services of a competent professional personshouldbesought. Neithertheauthorsnorthepublisherareliableforanyactionspromptedorcaused bytheinformationpresentedinthisbook.Anyviewsexpressedhereinarethose oftheauthorsanddonotrepresenttheviewsoftheorganizationstheyworkfor. OtherWileyEditorialOffices JohnWiley&Sons,111RiverStreet,Hoboken,NJ07030,USA JohnWiley&Sons,TheAtrium,SouthernGate,Chichester,WestSussex, P0198SQ,UnitedKingdom JohnWiley&Sons(Canada)Ltd,5353DundasStreetWest,Suite400,Toronto, Ontario,M9B6HB,Canada JohnWiley&SonsAustraliaLtd,42McDougallStreet,Milton,Queensland4064, Australia Wiley-VCH,Boschstrasse12,D-69469Weinheim,Germany LibraryofCongressCataloging-in-PublicationData ISBN 978-0-470-82293-7 Typesetin10.5/13ptPalatinobyLaserwordsPrivateLimited,Chennai,India. PrintedinSingaporebyMarkonoPrintMediaPte.Ltd. 10987654321 IntheNameofAllah,theAllMerciful,theAllBeneficent Contents Acknowledgment ix GlossaryofArabicTerms xi 1 TheDevelopmentandProgressofIslamicFinance 1 2 IssuesandChallenges 47 3 IslamicFinanceandGlobalization:Convergenceanda BoostforRapidGrowth? 75 4 GlobalizationandItsImplicationsforMuslimCountries 111 5 ExpandingFinancialFrontiers 129 6 ReputationalRiskfortheIslamicFinancialIndustry 149 7 TheDesignofBenchmarksforAssetPricing 179 8 Qard-ul-Hassan-basedMicrofinance 197 9 DevelopingtheTheoreticalFoundationsofEconomicsinIslam 211 10 IslamandEconomicDevelopment 243 11 TaxationandPublicExpenditureinIslam 263 12 TheScopeoftheSocialSafetyNetinIslam:ACaseStudy 293 References 327 Index 363 vii