Industry Updates

Welcoming the golden age read more

Bitcoin Startup Company Helps Muslims Get Loans read more

SME Bank targets 90pc Islamic financing portfolio read more

Islamic finanrce needs good talent to help it develop read more

US startup brings innovative Islamic microfinance to Indonesia read more

Thomson Reuters named “Best Research House” read more

Final approval for takaful law expected soon; industry constitutes 6% in total business read more

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Third annual Ethical Finance Innovation Challenge AND Awards (EFICA)

Thomson Reuters, in partnership with Abu Dhabi Islamic Bank, is proud to announce the launch of the third annual Ethical Finance Innovation Challenge & Awards (EFICA). The global awards champion new ideas that strengthen and advance ethics in finance to transform the global financial industry. EFICA is open to all.

The response to EFICA in 2013 and 2014 has been nothing short of encouraging for the future of the global financial services industry. We received over two hundred applications from individuals and organisations around the world from different sectors and backgrounds. Similar to the process in previous years, we will shortlist the best submissions to progress to workshops with the advisory board. Winners are then selected, by audience vote, during the EFICA gala dinner which gathers industry peers and experts.

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The lack of equity finance – really a problem of moral hazard?

by : Michael Gassner, Editor of IslamicFinance.de

Michael Gassner, Editor of IslamicFinance.de presented on the 3ème Congrès International de la Finance Islamique “Les Banques Islamiques et le Financement des Entreprises: Pratiques et enjeux théoriques” en Marrakech, 25/26 Mai 2015.

The presentation discussed that exponential growth of debt in Islamic finance is ruled out, nevertheless, debt and equity finance exists. The specific significance of equity finance (musharaka, mudaraba) lies in need for solid debt/equity ratio, as Muslims shall never die being in debt. Still Islamic banks barely provide any equity finance and the reason often given are moral hazard costs. This is denied as debt as well as equity has specific moral hazard problems, and if anything, even conventional banks would offer a mixture of debt and equity. Rather the assumed reason appears to be in the regulation (capital weight) and taxation (interest deductibility), which makes equity financing from a bank 2-4 times at least more expensive than debt finance, and thus not worth being offered.

The attached presentation is in French.

The organiser of the conference was the Groupe de recherche en Innovation, Responsabilités et Développement Durable (INREDD, UCA, Marrakech) Et the Bernoulli Center for Economics (BCE, Université de Basel, Suisse).