This text is replaced by the Flash movie.
Founded in 1990
IIBI Services
Courses | Student Login
Lectures & Seminars
Executive Development
NewHorizon Magazine
Information Services
Test Your Knowledge
Islamic Banking
Upcoming Events


 Islamic Banking

The Islamic Financial System
Glossary of Financial Terms

Pricing Transactions Linked to Interest rate Benchmark

There are continuing debates on whether the spirit of Shari`ah is being violated by the practice of "benchmarking" linked interest rate benchmark such as London Interbank Offered rate (LIBOR) plus an agreed mark-up in also pricing returns on Islamic finance transactions . At a very fundamental level, the reason for the debates is the lack of understanding to clearly discern the difference between the use of LIBOR as a benchmark for pricing and the use of non-Shari’ah compliant assets as a determinant for returns.

However, benchmarking touches upon the integrity of Islamic Finance as a whole, and the concept of Shari’ah-compliance vs Shari’ah-based approach in particular. There are practical challenges delaying a switch to participation-based structures, such as Musharakah and Mudarabah, that require financiers to participate in the underlying asset in a financing transaction.

Next >  Islam's Approach to Ethical Investment                                                   
IIBI Discussion Forum
Video Presentations
Islamic banking, a value proposition employing the concept of profit and risk sharing …more
Takaful, a scheme based on the principle of shared responsibility, mutual cooperation ...more
This text is replaced by the Flash movie.
This text is replaced by the Flash movie.
Disclaimer | Privacy Statement | © IIBI