The whole discipline of finance revolves around the study of risk. Insurance exemplifies another field where the study of risk is the core of the whole industry.However, if we survey how risk was handled theoretically we find that there are three aspects to the study of risk.Risk in the decision making process:In every decision we take, we seek an outcome that will, hopefully, take place shortly or longly after that, decision has been taken. However, we know that there are always "forces" that may not allow the outcome to materialize the way we intended for it to be. Some of these forces...

After struggling with a lack of dollars in its economy for over a year, the Egyptian central bank finally threw in the towel, moving to a liberalisation of the pound against the dollar to allow the market to set the rate and the economy to start moving again.The initial range of devaluation is from 8.9/$ to 13/$, meaning the pound has more than halved from the level it was at during the Arab Spring. This is in line with where the black market rate has been in recent days as the economy ground to a halt, having appreciated from a rate of 18/$ over the weekend and from 15/$ last week. The unce...

Real Estate Investment Trust is known in Indonesian regulation terminology as “Dana Investasi Real Estate” or abbreviated nicely as DIRE (read: dee-ray or dē-rā). DIRE is not an exact translation of REIT. This is because Trust Law, heavily utilized in common law countries, is not recognized in civil law-based jurisdiction of Indonesia. Capital Market Law of 1995 managed to circumvent the non-existent of Trust Law by introducing a legal form known as Collective Investment Contract (CIC). CIC provides the legal basis for public pooling of investment funds to be managed by investmen...

Thank you so much for returning to this page and for all your helpful and constructive comments after last month’s article. Your support and engagement is much appreciated. This month I would like to continue on the “Winds of Change theme” by trying to stimulate some discussion and thought around how we lubricate the mechanism and move up through the gears. Hence the title!After nearly a quarter of a century in the Islamic finance business and with my 65th Birthday looming (retirement age?) I thought I would try to describe how we can move forward effectively and com...

The oil market is broken. Volatile prices are undermining global energy security and increasing geopolitical risk. Getting agreement for a production cut among the Organization of the Petroleum Exporting Countries is proving difficult, and would in any case be hard to enforce. Instead of looking to the so-called swing producers, there is an alternative solution: create a swing consumer. Or to put it another way, a “tactical petroleum fund”.The collapse in oil prices since 2014 has cost producers around $1.8 trillion a year. Rich oil exporters have cut discretionary spending and d...

Editor's Note: In this series of articles on IslamicBanker.com, Yoga Prakasa explores Islamic REITs as an investment asset for waqf management in Indonesia, with particular focus on regulatory framework and shariah-compliancy. Waqif (the party who part with its asset) has created awqaf (plural of waqf) since the time of the Prophet (pbuh). They are considered as avenues for waqif to obtain continuing religious rewards as the awqaf assets are to be maintained in perpetuity to fulfil the needs of the beneficiaries as intended by the waqif. [1] Traditionally in the past, waqif...

Markets are starting to feel post-traumatic stress once more as the looming DoJ fine of up to $14bn weighs on the share price and perceived credit-worthiness of Deutsche Bank.Some hedge funds are winding down exposures and risk departments are scratching their heads to figure out if this is another Bear Stearns, Lehman or a different beast entirely.The curious element here is that as opposed to being in our normal framework of the returns of a private company being determined by the Governance Regime and policies of its home country, Germany, the fate of the equity of Deutsche Bank i...

Last month I was able to reflect on events that had impacted positively on me and used the title of “Joining up the dots”. This month I would like to comment on an area that has been a concern of mine for almost as long as I have been engaged in Islamic Finance, which is now about a quarter of a century. The area is that of Education in Islamic Finance and I want to frame the discussion under the banner of “The Winds of Change.” As always, these are very personal observations shared from my own particular vantage point at this exact moment in time. So here goes!More...

As I write this article, hundreds of bright and energetic young minds are developing their ideas to catch the fintech wave. A trend that may be more popular in Western markets.One of the largest sources of funding for companies in developing markets is banking. However, banking penetration is not as deep as that in the more developed economies, due to limited infrastructure and awareness. This is where financial technologies can play an important role in bridging the demand and supply.Let's focus on Indonesia, a country with the largest Muslim population&nbs...

 For the origins of the process of revenue generation in modern sukuk, we need to go back to the Ottoman cash waqfs. This special waqf form has a long history and goes back at least to the fifteenth century. What made these waqfs special was the fact that they were established with cash capital and had to invest this capital in order to finance the charity for which they had been established. [1] If we carefully examine the process of investing the endowed capital of an Ottoman cash waqf, we discover the very essence of the modern sukuk al-ijarah.A typical Ottoman cash waqf inv...