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Shamsher Mohamad and Veelaiporn Promwichit

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Edited by Mohamed Ariff and Shamsher Mohamad

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Mohamed Ariff and Shamsher Mohamad

Adam Smith traced the source of opulence of nation, which he called capital, to the uninterrupted efforts of every man to better his condition. Today we define wealth as the item that has some economic substance, a value such that this wealth can be used for several intended purposes, in modern economics, for consumption as theoretically glorified by the Utility Maximization Theorem (Arrow-Debreu). In this chapter, the reader is introduced to the modern idea of net wealth held by households and entities. The amount of wealth as at 2017 is given as US$ 250 trillion after all liabilities are subtracted from total wealth. In this context, Calvin’s contribution of wealth as God’s gift to man is referred to, which provides a continuity with Islam’s claim that wealth belongs to God, and He apportions who begets it.

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Mohamed A. Gadhoum and Shamsher Mohamad

Benchmarks serve a critical role financial markets as a point of reference for pricing the riskiness of a financial security, to indicate the relative value or opportunity cost of capital while it also serves as a yardstick for the relative performance of a portfolio. The existence of a transparent, observable, liquid, easy-to-compute and non-manipulative benchmark is vital for efficient financial markets. Islamic finance has yet to develop appropriate benchmarks and currently use LIBOR as the reference benchmark in determining expected rate of return in shariah-compliant securities. This practice has been allowed by scholars as an exception under the law of necessity. Unfortunately, despite being in practice for decades, this exception has become a general rule and the practice is so prevalent that most practitioners in the Islamic finance Industry. The key difficulty lies in obtaining a rate of return in an economy based on profit-and-loss sharing. This chapter discuss in detail the development of a benchmark for shariah-compliant investments taking into consideration the conceptual and practical issues.

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Adelina Zuleikha and Shamsher Mohamad

Fara’iḍ covers the principles under the Islamic contracting that covers the way the estate of a faithful is to be dealt with and distributed upon his/her death. It is a fundamental part of how the laws guide how wealth re-distribution is to be done in the case of intestate situation. The laws derive from revelations in the Quran to ensure that the wealth is not hoarded in the hands of a few but re-distributed equitably among the rightful dependents in the society with a larger view to mitigate the income inequality gap. In Islamic inheritance law, there are eight classes of heirs in accordance to their priority to inheritance. The rules and procedures for implementing the laws, the impediments, social-economic impact and practical issues are discussed. The major issues are: lack of awareness of the laws; the need to develop further the legal and operational infrastructure required for effective implementation.

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Mohamed Ariff and Shamsher Mohamad

Zakat is charity payable each year on the excess wealth beyond that needed for one’s station in life. This is mandated as a duty of believers to give to charity a small portion ranging from as low as 2.5% on the excess to 7% (in the case of ornaments of precious items). It is given voluntarily by the faithful to whoever they wish to give and that includes the poor among the family. The sum is unknown and it is thought to be very large because these sums of money are supporting mosques, education, hospitals, and orphanages and support for the needy. Zakat is to be paid first before the balance of wealth could be invested to earn more wealth, which in turn will mandate further zakat payments in the ensuing year. This is pertinent to wealth management because the faithful is to have professional advice on how to compute this amount each year. We believe this is part of wealth management advisory services.

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Islamic Wealth Management

Theory and Practice

Edited by Mohamed Ariff and Shamsher Mohamad

From an Islamic perspective, although the ownership of wealth is with God, humans are gifted with wealth to manage it with the objective of benefiting the human society. Such guidance means that wealth management is a process involving the accumulation, generation, purification, preservation and distribution of wealth, all to be conducted carefully in permissible ways. This book is the first to lay out a coherent framework on how wealth management should be conducted in compliance with guiding principles from edicts of a major world religion.
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Edited by Mohamed Ariff, Munawar Iqbal and Shamsher Mohamad

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Edited by Mohamed Ariff, Munawar Iqbal and Shamsher Mohamad

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The Islamic Debt Market for Sukuk Securities

The Theory and Practice of Profit Sharing Investment

Edited by Mohamed Ariff, Munawar Iqbal and Shamsher Mohamad

The relatively new sukuk (or Islamic debt securities) markets have grown to more than US $800 billion over the past decade, and continue to grow at a rate of around 20-30 per cent per year. Arguably the first of its kind, this path-breaking book provides a highly unique reference tool relating to key issues surrounding sukuk markets, which are found in 12 major financial centres, including Kuala Lumpur, London and Zurich.