Module ECON47215: Islamic Law and Financial Transactions

Department: Economics and Finance

ECON47215: Islamic Law and Financial Transactions

Prerequisites

• None

Corequisites

• None

Excluded Combination of Modules

• None

Aims

• To provide students with an advanced understanding of key concepts of Islamic law related to commercial and financial transactions.
• To enable students to critically evaluate the process of law making in Islam.
• To provide students with an advanced understanding of the principles and implications of Islamic law for financial transactions.
• To critically examine the application of Islamic contracts in Islamic financial institutions and different legal jurisdictions.

Content

• Introduction to Islamic Law: Brief history of Islamic law. Difference between Shari’ah and Fiqh. General Principles of Islamic law related to transactions.
• Methodology of Islamic Law (Usul-al Fiqh): Primary Sources of Islamic law (Quran and Sunnah). The process of obtaining legal rules from Shariah through ijtihad using other sources and methods including the following: Ijma (consensus), al-qiyas (analogy).
• Riba and Gharar: Definition and types of riba (riba al-fadl and riba al nasiah). Definition and types of gharar (Gharar in the essence of contract and the object of the contract). Implications of riba and gharar for contemporary financial transactions.
• Types of Traditional Nominate Contracts: Contracts of exchange—sale contracts (Bai), hire contract (ijarah), work done for reward (juala). Accessory contracts—agency (wakala), partnerships (sharika), assignment (hawala), pledge or mortgage (rahn). Gratuitous contracts—loan (qard), deposit (wadia), gift (hiba), guarantee and personal security (daman or kafala).
• Application of Islamic contracts in Contemporary Financial Transactions: Approaches to develop financial products from traditional contracts. Examples of major instruments used in Islamic finance.
• Shari’ah Governance: Functions of Shari’ah Supervisory Board in Islamic finance. Role of Shari’ah Supervisory Board in the pre- and post-product development stage. Critical issues in Shari’ah supervision.
• Issues Related to Application of Islamic Law in Financial Transactions:
• Islamic Banking Law/Statutes. Standardization of Shari’ah Rules. Dispute Settlement/Conflict Resolution Institutions. Application of Islamic contracts in common and civil law jurisdictions.

Learning Outcomes

• An advanced knowledge of the nature and scope of Islamic Law and its application in financial transactions.
• Advanced understanding of the application of Islamic contracts in contemporary financial transactions.
• An advanced knowledge of the issues related to implementing Islamic contracts consistent with the objectives of the Islamic Law (Maqasid al-Shari’ah).
• An advanced understanding of organizational and legal issues related to applying Islamic law during contemporary times.

• The ability to evaluate the principles of Islamic law and its applications in financial transactions.
• The ability to explain convincingly the rationale for the prohibition of riba and gharar and its implications for Islamic finance.
• The ability to critically review the contracts used in Islamic banking and finance.
• An advanced ability to analyse the role of Shari’ah boards in product development and compliance at Islamic financial institutions.
• The intellectual capacity to ascertain the problems of implementation of Islamic financial transactions.

• Independent learning within a defined framework of study at an advanced level.
• Independent thought in analyzing and critiquing existing scholarship on the subject area and in evaluating its contribution.
• The ability to work to a deadline and complete written work within word limits.
• The ability to seek out and use relevant data sources, including electronic and bibliographic sources.

Modes of Teaching, Learning and Assessment and how these contribute to the learning outcomes of the module

• The modes of teaching are lectures which provide students with an opportunity to learn new concepts, principals, and philosophies and seminars, which allow the students to discuss freely the assigned topics. Guidelines will be given by the tutor. At MA level, seminars are appropriate for the students because they are from different academic backgrounds. Seminars also allow a better exchange of views and ideas.
• Summative assessment is by a 60-minute in-class exam and 90 minutes exam. The in-class exam will test students' critical judgement and problem-solving technical skills. The 1.5 hour exam with written answers will test students’ depth of understanding and their analytical skills.

Teaching Methods and Learning Hours

Summative Assessment

Formative Assessment:

Students will receive feedback on their contributions to seminars

■ Attendance at all activities marked with this symbol will be monitored. Students who fail to attend these activities, or to complete the summative or formative assessment specified above, will be subject to the procedures defined in the University's General Regulation V, and may be required to leave the University