MSc Investment Banking and Islamic Finance
Programme Content Part 2 in Reading
- Theory and Ethics in Islamic Economics and Finance
- Design, Implementation and Risk Aspects of Islamic Financial Products and Services
- The Principles of Islamic Commercial Jurisprudence and the Nominate Contracts
- Principles of Financial Engineering
- Financial Regulation and Regulatory Policy or International Securities Markets or Topics in the History of Finance
Module Descriptions
Theory and Ethics in Islamic Economics and Finance
Convenor: INCEIF Faculty
Credits: 10
Aims:
To provide students with a critical understanding of Islamic economy by considering the implications of the application of Shariah law for the economic and financial systems. Topics include:
- Scope of Islamic economics and finance in relation to conventional economics and finance
- History of the Islamic economic system in various eras
- Contributions by Islamic economists or Muslim thinkers
- Wealth creation and mobilisation
- Concept of money, risk and returns from an Islamic perspective.
Design, Implementation and Risk Aspects of Islamic Financial Products and Services
Convenor: INCEIF Faculty
Credits: 20
Aims:
To provide students with the opportunity to study the application of Shari'ah principles and nominate contracts in the design of financial products and services that are Shari'ah compliant, as well as the risk characteristics of these products and services, with particular reference to Islamic banks and insurance (Takaful) undertakings.
Outline content:
1. Review of Shari'ah principles - Fiqh al Muamalat (with reference to Module ICM 257)
2. Islamic banking products and their basis in nominate contracts - Islamic financing (asset side)
- sale and mark-up based financing: Murabahah, Salam, Istisna'a, Tawarruq
- lease (Ijarah) based financing: Ijarah and Ijarah Muntahia Bittamleek
- profit and loss sharing based financing: Mudarabah and Musharakah
- risks of these modes of financing: credit risk and market risk, credit risk mitigation and collateral (Rahn)
3. Islamic banking products and their basis in nominate contracts - Islamic funds mobilisation (liabilities & capital side)
- current accounts (Qard)
- profit sharing investment accounts - PSIA (Mudarabah): restricted and unrestricted
4. Islamic securities (sukuk)
- held as assets
- issued to securitise assets
- Shari'ah considerations in sukuk structures
5. Risk management and capital adequacy aspects
- IFSB capital adequacy standards
- Risk weights and the CAR formula
- Problem of PSIA
6. Islamic insurance (Takaful): its basic principles and basis in Fiqh al Muamalat
- Structure of Takaful undertakings and role of Takaful operator
- General (non-life) Takaful
- Family (life) Takaful
- Reinsurance
7. Supervisory and regulatory considerations
IFSB Guiding Principles for the Supervisory Review Process
The Principles of Islamic Commercial Jurisprudence and the Nominate Contracts
Convenor: INCEIF Faculty
Credits: 10
Aims:
Provides students with the opportunity to study the juristic basis of Islamic finance, and the nominate contracts that are set out in Islamic commercial jurisprudence (the Fiqh al Muamalat).
Outline content:
- The origins of Islamic commercial jurisprudence
- Prohibitions to be respected in order for Islamic contracts to be valid:
- Avoidance of riba (pure return on money), maysir (speculation), and gharar (uncertainty or ambiguity of subject matter) - The frequently used nominate contracts
- Overview of Islamic financial products and their basis in nominate contracts (see Module 255)
- Shari'ah governance of Islamic financial institutions
- The IFSB Guidelines on Shari'ah governance
Convenor: Richard Dale
Credits: 10
Aims:
This module aims to provide both a theoretical basis for financial regulation and a description of its practical application. The focus is on prudential regulation that is designed to maintain systemic stability while also protecting depositors, investors and counterparties in banking, securities and derivatives markets. The module explores a number of key regulatory policy issues, including the balance between official and self-regulation, the nature and scope of ‘moral hazard’ in financial markets and alternative approaches to capital adequacy assessment.
Outline Content:
Topic 1: The objectives, techniques and scope of financial regulation. The moral hazard issue. Preventive versus protective regulation.
Topic 2: Preventive regulation. Capital adequacy: the 1988 Basle Accord, the 1997 Market Risk Amendment and the EU Capital Adequacy Directive.
Topic 3: Alternative approaches to capital adequacy assessment: the 1999 Basle proposals, the pre-commitment approach and the use of market indicators (credit ratings and subordinated debt).
Topic 4: Protective regulation: deposit insurance and the lender of last resort.
Topic 5: The separation issue: the regulatory interface between banking and securities business: Regulating financial conglomerates.
Topic 6: Risk and regulation in derivatives markets.
Topic 7: isk and regulation in payments, clearing and settlement systems.
Topic 8: The structure of financial regulation.
Topic 9: International regulatory co-operation.
Topic 10: Anatomy of a crisis: the Asian debt crisis and its regulatory implications.
International Securities Markets
Convenor: John Evans
Number of credits: 10
Terms in which taught: Autumn
Aims:
International Securities Markets applies general valuation risk assessment methods to: fixed income securities, derivatives and markets. It describes the basic characteristics of each fixed-income security, cash and underlying, and develops practical strategies for finding its value and assessing its risk. It also considers how the markets for these securities are related and begins the task of showing how these relationships can be exploited for trading or investment.
The analytical techniques introduced in this module are applied to allow the successful candidate to apply directly to industry the more theoretical market valuation and risk models learned in other core modules taken in the first term.
Outline Content:
- Topic 1 - Fixed Income Analysis.
- Topic 2 - Fixed Income Analysis.
- Topic 3 - Rates Trading and Hedging I.
- Mid-term test 1
- Topic 4 - Rates Trading and Hedging II.
- Topic 5 - Credit Analysis and Products I.
- Topic 6 - Credit Analysis and Products II.
- Mid-term test 2
Topics in the History of Finance
Convenor: Adrian Bell
Credits: 10
Aims:
This module aims to provide students with an understanding of the origins of Financial Markets, and with a broader appreciation of the early development of products and innovations in Finance – which many assume are recent twentieth century inventions.
