Wealth Management and Investment in Islamic Settings: Opportunities and Challenges

Description

This book addresses the theory, practices, challenges, key issues and potential future policies concerning investment and wealth management in connection with Islamic finance. There is a noted scarcity of literature on Islamic approaches towards wealth management from a jurisprudential perspective, and so this book aims to address this lacuna in available literature. It demonstrates strategies for wealth management in keeping with the Qur’an and Sunn’ah, posing questions relating to interest and investment, and proposing financial models for benefiting the poorer segments of society while simultaneously satisfying economic necessities in keeping with Islamic law. Given its breadth of scope, combining perspectives from scholars and practitioners with extensive experience in the banking and finance sector from different Islamic settings including Malaysia, Saudi Arabia, Sri Lanka, Brunei and Indonesia, this edited volume will benefit practitioners, researchers, and graduate students studying finance, economics and business management in an Islamic context. Foreword Preface Contents Editors and Contributors List of Figures List of Tables 1 Wealth Management and Investment: An Islamic Epistemology 1.1 Epistemology of Wealth and Wealth Management in the Islamic Framework 1.2 Islamic Concept of Wealth 1.2.1 The Concept of Profit in Islam 1.3 Types of Wealth 1.3.1 Corrupt Wealth (Impure Wealth) 1.3.2 Clean Wealth (Purified Wealth) 1.3.3 General Purpose Wealth 1.3.4 Special Purpose Wealth 1.3.5 Mental Account and Wealth 1.4 Islamic Wealth Management 1.4.1 Islamic Wealth Management Industry 1.4.2 Role of Wealth Manager 1.4.3 Wealth and Philanthropy, Free or Regulated Market 1.4.4 Financial Therapy 1.5 Role of State 1.6 Gift Economy and Gift Exchange in the Islamic Framework 1.7 Conclusion References Part I Principles of Islamic Wealth Management 2 Decoding Islamic Wealth Management from Qur’anic Texts 2.1 The Qur’an as the Primer Source of Islamic Economic Thought 2.1.1 Previous Works of Literature 2.2 Methodology of the Study 2.3 Result and Discussion 2.3.1 Wealth Management in the Qur’an 2.4 Proposed Concept of Islamic Wealth Management 2.5 Conclusion References 3 Islam, Spirituality and Wealth: Islamic Framework of Wealth Management 3.1 Wealth Within Islamic Purview 3.2 Wealth and Spirituality: A Shari’ah Perspective 3.3 An Islamic Framework of Wealth Management 3.4 Conclusion and Recommendations References 4 Islamic Investment-Cum-Wealth Management: Politics, Warfare and Welfare 4.1 Islamic Institutional Framework and Islamic Principles of Wealth Management-Cum-Investment 4.2 Islamic Investment and Wealth Management Amidst the Islamic Sustainable Development 4.2.1 The Islamic Transmission Mechanism for Realizing Sustainable Development 4.3 Universal Islamic Divine Civilized Politics of Wealth-Welfare Nexus Versus the Secular Mundane Amoral Barbaric Nationalistic Politics of Wealth-Warfare Nexus 4.4 Epilogue and Policy Implications-Cum-Recommendations References 5 Wealth Creation and Management in Islam 5.1 Concept of Wealth in Islam 5.2 Islamic Wealth Management (IWM) 5.3 The Wealth Cycle 5.3.1 Wealth Creation 5.3.2 Islamic Rules with Regards to Wealth Creation 5.3.3 Wealth Enhancement 5.3.4 Wealth Protection 5.3.5 Wealth Distribution 5.3.6 Wealth Distribution - Charity 5.3.7 A Comparative View of Poverty Alleviation Instruments in Islam 5.3.8 Wealth Distribution—Estate Management 5.4 The Future of Wealth Creation and Management in Islam 5.5 Conclusion References 6 Investment and Wealth Management in Contemporary Times: Zakat as a Viable Approach 6.1 An Overview of Investment and Wealth Management 6.2 Islam, Investment, and Wealth Management 6.2.1 What is Zakat? 6.3 Zakat as Investment and Wealth Management Tool 6.4 Conclusion References 7 The Urgency of Debt Management in the Perspective of Islamic Wealth Management 7.1 Debt, Need or Lifestyle 7.2 Debt in Wealth Management 7.3 Debt on Islamic Perspective 7.4 Conditions Permitted to Have Debts 7.5 Islam Solution Toward Debt Trap 7.6 Conclusions References Part II Applications of Islamic Wealth Management 8 Project Financing Models for Small Medium Property Enterprises in the Framework of Maqasid Al-Shari’ah 8.1 Project Financing 8.1.1 Fundamental Elements in Project Financing 8.1.2 Project Finance within the Maqasid Al-Shari’ah Framework 8.2 Method 8.3 Result and Discussion 8.4 Conclusion References 9 The Effects of Fixed Return Instruments on Investment Decisions in Islamic Economics: Using Stochastic Mathematical Model 9.1 Stochastic Modeling of Investment Decisions 9.2 Investment Decisions in Islamic Economics 9.2.1 Modeling Sukuk as a Fixed Return Bond 9.2.2 Portfolio Choice with no Fixed Return Instrument 9.2.3 Investment Decisions Considering Sukuk Characteristics 9.3 Comparing Optimal Path of Different Models 9.3.1 Optimal Path of Wealth 9.3.2 Optimal Path of Consumption 9.3.3 Optimal Path of Utility 9.3.4 Optimal Path of Welfare 9.4 Conclusion Appendix 9.1 Finding the Form of Value Function References 10 Family Financial Management in Realizing Sakinah Family 10.1 Background of the Problem 10.2 Literatures on Eight Principles 10.3 Discussion on Model of Family Finance 10.4 Managing Income 10.5 Managing Needs 10.6 Managing Dreams 10.7 Monitoring 10.8 Conclusion and Recommendation for Future Research References Part III Country Experiences 11 Measuring the Impact of Open Innovation on Firm Performance in Indonesia Halal Industry 11.1 Innovation and Performance 11.1.1 Open Innovation 11.1.2 Firm Performance 11.2 Method 11.2.1 Data and Sample 11.2.2 Data Measurement 11.3 Result and Discussion 11.4 Conclusion References 12 How Does Accounting Play a Role in Islamic Microfinance and Islamic Wealth Management Practices? Case Studies in Indonesia, Pakistan and Egypt 12.1 Islamic Accounting, Microfinance and Islamic Wealth Management 12.2 Participatory Action Research (PAR) Approach 12.2.1 Research Instruments 12.3 PAR Findings 12.3.1 Program Realization 12.3.2 Akhuwat, Pakistan (25–30 November 2018 and 11–15 March 2019) 12.3.3 Rizqi Chapter Jameel, Egypt (3–8 February 2019 and 11–15 March 2019) 12.4 Comparison_Analysis 12.4.1 Indonesian and Pakistani Respondents 12.4.2 Age Range 12.4.3 Level of Education 12.4.4 Profession 12.4.5 Conclusions and Recommendations for Further Research References 13 Social Impact Sukūk: Implications from the Notion of Maslaha 13.1 The Principle of Maslaha in Islamic Finance 13.2 The Current Status of Sukūk Instruments and the Market 13.3 Sukūk Structure—From Generic to SRI 13.4 Discussion and Conclusions References 14 Religion, Islamic Values and Debt Management, the Malaysian Experience 14.1 Islam and Debt Management Behaviour 14.2 Religiosity Measurement 14.3 Measurements for Debt Management Awareness and Behaviour 14.4 Findings 14.5 Conclusion References 15 Prospects and Challenges for Islamic Investment and Wealth Management in Mauritius 15.1 Mauritius as an International Financial Centre 15.2 Historical Development of Islamic Finance in Mauritius 15.3 Prospects for Developing Mauritius as an IIWM Destination 15.3.1 Islamic Product Development 15.4 Challenges and Opportunities in Positioning Mauritius as an IIWM Destination 15.4.1 Demand Side 15.4.2 Supply Side 15.5 Conclusion and Way Forward in Brightening the Future of Mauritius as an IIWM Centre References 16 Sustainability, Sharī‘ah Governance and Financial Performance: Evidence from Companies Listed on the Jakarta Islamic Index 16.1 Sustainability and Corporate Financial Performance 16.2 Sharī‘ah Compliance and Corporate Financial Performance 16.3 Conceptual Framework 16.3.1 Methodology 16.4 Results and Discussions 16.5 Conclusion Appendix References 17 When It Comes to Risk, is Sukuk Better Than Conventional Bonds? A Comparative Study of NASDAQ Securities 17.1 Data and Method 17.1.1 Data Analysis 17.1.2 Value at Risk Method 17.2 Analysis 17.2.1 Descriptive Statistics of Sukuk and Conventional Bonds 17.2.2 Historical Simulation Results 17.2.3 Monte Carlo Simulation Method 17.2.4 Comparing VaR Results of Historical and Monte Carlo Simulation 17.3 Conclusion Appendices Appendix 1 Appendix 2 Appendix 3 Appendix 4 References 18 COVID-19 Pandemic and ‘KITA JAGA KITA’: Appraisal of Social Responsible Practices of Islamic Banking Institutions in Malaysia 18.1 Malaysian Government and Bank Negara COVID-19 Economic Stimulus, Relief and Financing Packages 18.2 Social Responsible Practices of Malaysian Islamic Banking Institutions 18.3 Conclusion References Part IV Waqf: An Ethical Investment 19 Waqf as a Financing Tool and Its Role in Achieving SDGs and Foreseeing the Future 19.1 Concept of Sustainability in Islamic Economic Thoughts 19.1.1 Sustainability Development Goals 19.2 The Capacity of Waqf to Accommodate Advance Levels of SDGs 19.2.1 Waqf Aims at Ending Poverty in All Its Forms Everywhere 19.2.2 Waqf Aims at Ending Hunger, Achieving Good Security and Improved Nutrition and Promote Sustainable Agriculture 19.2.3 Waqf Ensures Healthy Lives and Promotes Well-Being for All Parts of Society 19.2.4 Waqf in the Islamic Civilization Have Provided Free and Quality Education for All Parts of Society 19.2.5 The Role of Waqf in Caring for Woman and Its Role in Woman Empowerment 19.2.6 The Role of Waqf in Ensuring Availability and Sustainable Management of Water for Irrigation and Sanitation for All 19.2.7 Ensuring Access to Affordable, Reliable, Sustainable, and Modern Energy for All 19.2.8 Developing Social Capital and Building Resilient Infrastructure 19.2.9 Contribution of Waqf to Achieving Sustainable Industrialization 19.2.10 Waqf Promotes Peace and Security Mentally, Socially, and Economically 19.2.11 Waqf Helps in Protecting Freedom, Justice, and Human Dignity 19.2.12 The Environmental Role of Waqf 19.2.13 Conserving and Protecting the Environment, Oceans, Biodiversity, and the Ecosystem 19.2.14 Sustainable Consumption, Production Patters, and Sustainability Cities and Human Settlements 19.3 Recommendations for Operationalizing Waqf to Achieve SDGs 19.4 Conclusion Bibliography 20 Blended Finance and the Role of Waqf Bank: Shaping the SDGs in Indonesia 20.1 Blended Finance and Its Principles 20.2 Waqf Bank: How It Works? 20.3 Modelling Waqf Bank Based Blended Finance for SDGs in Indonesia 20.4 Conclusion References 21 Waqf Contributions for Sustainable Development Goals: A Critical Appraisal 21.1 Islamic Social Finance 21.1.1 Overview of Waqf and Cash Waqf 21.1.2 Waqf Sukuk: The Practical Implementation of Cash Waqf 21.1.3 Waqf Contributions to Achieving SDGs: Selected Cases 21.1.3.1 Case One: Waqf Contributions to SDGs in the Republic of Turkey 21.1.3.2 Case Two: Islamic Development Bank (IsDB) 21.2 Challenges Encountering Full Employment of Waqf in SDGs 21.3 Conclusion and Recommendations Appendix A Appendix B References Part V Special Issue 22 A Path Towards Success for Muslim Households: Wealth Management and Shari'ah Rulings 22.1 Shari'ah Maxims and Their Application in Finance 22.2 Debt and Muslim Households 22.3 Path of Success and Household’s Behavior 22.4 Household Assets and Islamic Financial Institutions (IFI) 22.5 Conclusion References