Course Syllabus
Semester 1, 2013
FIN 431: Islamic Finance
Instructor: Professor Dr. Ishaq Bhatti
Office: 347 (FEA)
Office Hours: Sunday, Tuesday & Thursday 11.00 - 12.00, and by appointment
E-mail: IBKAAU@gmail.com
COURSE DISCRETION
This course provides a comprehensive introduction to Islamic banking and finance. It
starts with the basics tools used in Islamic Banking and Finance (IBF). The course is
a rigorous, covering from principles of IBF, structure of IBF, profit and loss sharing
(PLS) and non PLS modes of investments; Mudraba, Murahaba, Musharka, Istisna,
with the help of diagrams, practical questions, quantitative applications to Islamic
financial market structure and Islamic financial asset management and valuation.
COURSE OBJECTIVES
The main objectives of this course are to:
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To introduce the principles of Islamic banking, finance & investment.
To present the business ethics from Islamic prospective.
To discuss the Islamic law of contracts and business transactions.
To explain the trading in Islamic law.
To gain insight into the Islamic trading products.
To gain knowledge of IBF and financial engineering
A case of REIT’s application into IBF structure
LEARNING OUTCOMES
Upon completion of this course student should be able to:
1. Understand the principles of Islamic banking and finance and various methods
of IBF trading.
2. Familiarize the difference between western-conventional and Islamic - IBF.
3. Determine the methods of Shari’ah compliant financing and its real life
application.
4. Acquire the key terms used in Islamic Banking and Finance.
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5. Comprehend the fundamental concepts of IBF and how it differs with the
modern investment theory and financial markets and money making business.
COURSE MATERIAL
Text Book:
Understanding Islamic Finance, Ayub, M., Published by: John Wiley & Sons, Inc., (2007).
Supplementary References:
Islamic Finance. El-Gamal, M, published by Cambridge University press, 7st Edition 2007.
Bhatti, M. Ishaq Lecture notes and power point slides which will be distributed on
weekly basis
An important complement to class work is following the IBF financial news. There
are several sources of information on the internet such as Bloomberg, Reuters and
Yahoo Finance,
Supplementary (but optional) material
1. Islamic Development Bank, Jeddah, KSA.
2. Bank Negara, Malaysia
FORMAT
This course is organized around the following modules:
1. Overview of the IBF
2. IBF Portfolio Selection
3. Various models and modes of IBF 4. Examples of modes of Sharia compliancy
5. IBF markets
6. REIT structure
COURSE GRADING
Your course grade will reflect your performance midterm and final exams,
assignments, and class participation, with weights determined as follows:
Midterm Exam 1
Midterm Exam 2
Final Exam
Assignments
Class Participation
20%
20%
40%
10%
10%
The final exam is cumulative but it focuses mostly on issues covered after the
midterm exam. All exams are closed book tests.
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IMPORTANT NOTE
If a midterm exam is not completed, the mark assigned to the missed component
will be zero except in the case of a valid excuse (illness, death of a close family
member, etc.). In the case of a valid excuse the marks associated with the missed
component will be re-assigned to the final exam.
In every aspect of the course, students are required to adhere to the standards of
conduct in the King Abdulaziz University Honor Code
CLASSROOM USE
 Students should stay alert in the class and conduct themselves professionally
at all times.
 Class starts promptly at the time indicated on your schedule. Late commers
will be penalized in class participation marks.
 It is the student’s responsibility to obtain handouts, notes, and assignments
from any missed days.
 Students are expected to follow the college’s acceptable use policy while in
the class.
HOW TO STUDY FOR THIS COURSE:
 Spend some time on the course every day, whether you have class or not
 Take good notes in class and review them frequently, comparing them to
corresponding material in the text
 Read the chapter in the textbook (prior to its being covered in class)
 Answer and study the questions in the text
 Do homework assignments as soon as possible after they have been assigned
 Pay attention to the solutions (i.e., the solution processes), not just the answers
 Get to know the software SSP involved so that you feel comfortable using it to
solve managerial problems with it without having to spend a great deal of time
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Topic
Tentative Course Outline
Suggested Textbook
Readings
Questions
Web Questions
1. Introduction of
Chapter 1
Dr Ishaq Bhatti’s lecture
Islamic finance.
1.1-1.8
notes & PPt
2. Features of Islamic
Chapters 2 & 3:
PPt: Power point slides
Economic System.
3. Islamic Business
Chapters 4
Dr IB & PPts
Ethics.
4. Islamic Law of
Dr IB & PPts
Chapter 5
Contracts.
5. Financial
Dr IB & PPts
Institutions and
Chapter 6
Products.
6. Trading in Islamic
Dr IB & PPts
Chapter 7
commercial law.
7. Loan and Debt in
Dr IB & PPts
Chapter 8
commercial law.
8. Murabaha and
Dr IB & PPts
Chapter 8
musawamah.
Note: The above course outline is tentative and may be subject to change as class progresses.
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