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ABSTRACTThe practice of ribā ("usury" or "interest" in Arabic) is forbidden by Islam. This prohibition is inscribed in Islamic Law originating during the Middle Ages in The Arab Peninsula. It is at the core of what is called "Islamic finance", having had a remarkable expansion in the second part of the twentieth century. This article focuses on the origin of ribā prohibition, the problems facing Islamic finance at the eve of the third millennium and the development prospects of Islamic financial institutions.
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Islamic finance : a recent history with France, a long story with its banks Showing a vigorous resistance to the actual financial crisis, the Islamic Finance sector continues to achieve sustained high growth. Indeed, Islamic banks are slightly exposed to the risks generated by the subprimes loans than conventional banks. Profiting from a continual surge from the petrodollars and the repatriation of some capital after September 11th, the Gulf region takes advantage today of an important liquidity concentration. This raises the question of how France will draw this capital to the Paris financial place. Thus, recently, in addition to the difficulties faced by many financial companies and liquidity problems between different banks, interrogations raise about France position toward Islamic finance. This paper analyzes the projections, the challenges and the opportunities given by this sector in France. If the debate on its development on the Hexagon is only at its beginnings, some French banks are already very active there. This paper tries to analyze the trades’ lines and the expertise developed by these banks outside France. This study puts forward the performance of these banks which are sometimes leaders on some areas of Islamic Finance. Classification JEL : G20, G10.
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The purpose of this article is to analyze the state court case law on Islamic finance. Several courts in the world have been called upon to rule on a dispute relating to Islamic finance. Thirty decisions on this area were rendered mainly in Malaysia, England, India and the United States. It appears from this case-law that, in essence, two questions have occupied the judges : the question of the constitutionality of the Islamic finance and the determination of the law applicable to international Islamic financing contracts. The problem of constitutionality arose mainly in the United States, India and Malaysia. The issue of the applicable law to international Islamic finance contracts was considered by English judges and doctrine. It is linked to the issue of normativity or juridicity Sharia. Does Sharia constitute a law that could govern an international contract ?
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Islamic banks' profitability Islamic banks are not allowed to pay or charge interests, considered as prohibited usury (riba). Islamic banks can undertake only financing activities where an underlying physical asset is involved, either for trade or production. So, Islamic banks rely on the cardinal principle of profit and loss sharing with the financed counterpart. Symmetrically, an Islamic bank has to share its « profits » with certain depositors who place their savings in « investment accounts ». With respect to Islamic banks' credit worthiness, the positives that Islamic banking brings in terms of profitability tend to be offset by weaker liquidity. Indeed, relying on a theoretical model based on the calibration technique, we show that an Islamic bank's profitability is less volatile than that of a conventional bank. Finally, it is heavily suspected, from empirical data, that Islamic banks are more profitable than their conventional peers : the former have the ability to extract a « rent » from their funding structure, characterized by the large amount of non-remunerated deposits. JEL classifications : G21
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The problem of the working capital for the little and middle-sized firms interest specially the finance institutions of Islamic countries where the retail trade and the native craftmen overcome and money relations are carried out intuitu personae. The difficulties in development countries to acceed to credit appear in the needs of finance for working cycle as the main or one and only else component of a short duration working capital. In precarious surroundings, the islamic tradition involves a sharing of risks between loaners and borrowers. The banking system deficiencies are balanced with an informal sector which aids firms to get raw materials, goods in process or often obsolete plants and to overcome intingency of every country. The sharia, muslim law, rests itself on the equity of deals and thésaurisation. The money lenders join in the project they finance according to the rule of profits and losses sharing. Financing is settled on the stocks amounts, credits and debts. They cut down their expenses because every firm lives from day to day and the contracting partners know one another Islamic agreements such as musharaka, murabaha or ijara, which is a kind of leasing agreement, bring researches for projects and finance means. Rigid against loans bearing interest, Islamic finance gets pragmatic in everyday life worries.
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Many studies have set forth that Shariah Compliant Investments (SCI) and Conventional Investments (CI) record similar financial performances. Such a result goes against the basic principles of modern portfolio theory. The aim of this paper is to provide several explanations for these counterintuitive results using an empirical corpus composed by 37 studies. Through a case of index reconstruction, we set forth that the exclusion of the financial sector combined with pro-cyclical negative screening methods play an important role in explaining the financial performance of the SCI.
Keywords: Performance financière, Investissement Conforme à la Charia, Filtrage islamique, Financial performance, Shariah Compliant Investment, Islamic screening, Rendimiento financiero, Inversión conforme a la Sharía, Filtraje islámico
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■ Samir Amghar, International Players and French IslamWith roughly five million Muslims on its national territory, France has become a focal point for a certain number of international players who believe that exercising control over this population is a sure way to increase their power. This article attempts to construct a typology of the various international players vying for dominance over Islam in France. First, there are those countries from which most of the Muslims in France originate (Algeria, Morocco and Turkey). These States are making use of Islam in France as a way of controlling their expatriate populations. They also deploy their religion as a bastion against the rhetoric of Islamists who corne from these same countries. Second, Saudi Arabia, via the intermediary of para-State structures such as the World Islamic League, or through its Islamic universities, is developing networks and agents in order to turn itself into an Islamic religious superpower. Finally, transnational Islamic movements such as the Union of Islamic Organizations in France, close to the Muslim Brotherhoods, are building a transnational network with the aim of becoming indispensable players in the re-islamization of France.
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The situation and perspectives of evolution of French speaking Black African Countries' Financial SystemsBanking systems implemented in the aftermath of independence of French speaking African countries have been greatly upset by the 1980's economic, political and social crises. Major restructurations have occurred, mainly in development banks, and to a lesser extent some trade banks, and today most banks look sound and liquid.The Banking Committees which were set up are the best guarantee for the continuation of this situation. The weight of French banks, even though still strong, tends to decrease considerably along with total withdrawal from certain countries. The establishment of new partners, either from Europe (Belgolaise, in particular), or from the Maghreb (NW Africa) or private locals make it possible to develop a diversified structure oriented towards a complementary structure involving both « wholesale banks », with international competence, and « retail banks », often limited to the national level.The still slow implementation of specialized institutions in long-term financing of major corporations (Regional Stock Exchanges, Venture-capital corporations, etc.), and micro-companies (decentralized institutions) should be rapidly completed by a structure adapted to SME financing (popular bank system, or mutual guarantee institutions). It is most probably in this field, as well as in that of social oriented financing, that a great deal of work still remains to be done.