COURSE DESCRIPTION
This advanced course offers a comprehensive and practical exploration of the diverse modes of finance used in Islamic banking and finance. Building on foundational principles, the course systematically examines the mechanics, application, risk profiles, and Shariah compliance requirements of key Islamic financial contracts. Students will explore trade-based modes including Murabaha, Salam, and Istisna‘a; partnership-based modes including Mudarabah and Musharakah; and the lease-based mode of Ijarah. The course also addresses contemporary applications, including Sukuk (Islamic bonds) and the structuring of complex products. Emphasizing real-world case studies and practical product structuring, this course integrates theoretical knowledge with the skills needed to analyze, design, and manage Shariah-compliant financial solutions. Advanced topics such as risk mitigation, Shariah governance, and the integration of fintech with Islamic modes will also be covered.
COURSE TEACHING OBJECTIVES
Compare and contrast the underlying legal and economic principles of the major Islamic finance modes, differentiating them from conventional financial products.
Analyze the operational mechanics of key contracts including Murabaha, Mudarabah, Musharakah, Ijarah, Salam, and Istisna‘a, and evaluate their unique risk-return profiles.
Apply Shariah rules to the structuring of products in retail, corporate, and trade finance applications, demonstrating an ability to map a transaction to the appropriate mode.
Critically assess the risk considerations inherent in each mode and evaluate appropriate risk mitigation and management strategies employed by Islamic financial institutions.
Assess the application of these modes in complex financial structures, including Sukuk and modern digital finance (FinTech), and synthesize this knowledge to propose a Shariah-compliant solution for a given practical financing scenario.
COURSE STUDENT LEARNING OUTCOMES
Upon successful completion of this course, students will be able to:
Explain the operational mechanism of at least six core Islamic finance modes and differentiate their appropriate use-cases.
Construct a product-structuring diagram (e.g., for a Murabaha transaction) that accurately maps the flow of funds, assets, and contractual obligations.
Calculate profit rates and settlements for Shariah-compliant financing under different modes, such as calculating the return for an Ijarah lease.
Analyze a business financing scenario and recommend the most suitable Islamic finance mode based on the client’s needs and Shariah requirements.
Critically evaluate the risk profile of a specific Islamic financing structure and propose appropriate risk mitigation strategies.
ORGANIZATION OF COURSE STUDIES
The course is organized into five study periods. For each period, the student is required to acquire and intensively read the designated chapters from the assigned textbook(s), view the recommended supplementary video(s), and submit a significant response paper or reflective assignment (500–1,000 words). The student must contact the instructor for feedback after each period.