PENERAPAN MANAJEMEN RESIKO PADA BANK

Ada beberapa alasan mengapa manajemen resiko harus diterapkan di perbankan syariah, dan mengapa begitu penting, jika kita teliti lagi lebih lanjut apalagi dengan penerapan Bassel Accord II yang merupakan penyempurnaan dari Bassel Accord I, tidak terlepas dari resiko global yang terjadi pada peristiwa Enron dimana telah terjadi kecerobahan atau manipulasi data, oleh sebab itu muncullah dua tokoh fokal di parlemen Amerika yang bernama Sarbone Oxley, sehingga setiap laopran keuangan harus cmply dengan peraturan SOX atau Sarbone Oxle. Terilham dari hal itu maka berimbas kepada sektor perbankan untuk menerapkan manajemen resiko, ditambah lagi dengan kondisi yang tidak menentu, menyebabkan perbankan mau tidak mau menerapkan manajemen Resiko

Alasan Mengapa manajemen resiko begitu penting
Bank adalah perusahaan jasa yang pendapatannya diperoleh dari interaksi dengan nasabah sehingga resiko tidak mungkin tidak ada
Dengan mengetahui resiko maka kita dapat mengantisipasi dan mengambil tindakan yang diperlukan dalam menghadapi nasabah/permasalahan
Dapat lebih menumbuhkan pemahaman pengawasan melekat, yang merupakan fungsi sangat penting dalam aktivitas operasional.
Faktor Sejarah Krisis Perbankan NasionalAda beberapa alasan mengapa Bank-bank banyak di luiqidasi pada tahun 1998
Pembiayaan berlebihan pada sektor ekonomi yang jenuh dan tidak produktif (Properti dan industri lain yang unstable, yang tergantung pada bahan baku/jadi import)Banking risk exposure :Credit Risk : Akibat unproductive sectorMarket Risk, khususnya : Forex Risk akibat:Depresiasi Rp. Thdp Dollar. Forex rate, rate of return risk akibat :repricing gapLiquidity risk, akibat: long term investment ><>
Pembiayaan pada group sendiriPelanggaran BMPK : Bank SUMA,BDNI,BUN,dsbCredit Risk Exposure akibat tidak ada diversifikasi terhadap portofolioCredit Fraud dan Incompetence dari faktor manusiaTotal Kerugian I donesia : Rp. 600 Trilyun
Defenisi Manajemen Resiko
Manajemen Resiko sebagai rangkaian prosedur dan metodologi yang digunakan untuk mengidentifikasi, mengukur, memantau, dan mengendalikan resiko yang timbul dati kegiatan usaha BankBagaimana memperlakukan resiko
Dihindari, apabila resiko tersebut masih dalam pertimbangan untuk diambil, misalnya karena tidak masuk kategori Resiko yang diinginkan Bank atau karena kemungkinan jauh lebih besar dibandingkan keuntungan yang diharapkan
Diterima dan dipertahankan, apabila resiko berada pada tingkat yang paling ekonomis
Dinaikkan, diturunkan atau dihilangkan, apabila resiko yang ada dapat dikendalikan dengan tata kelola yang baik, atau melalui pengoperasian exit strategy
Dikurangi, misalnya dengan mendiversifikasi portofolio yang ada, atau membagi (share) resiko dengan pihak lain
Dipagari (hedge), apabila resiko dapat dilindungi secara atificial, misalnya resiko dinetralisir sampai batas tertentu dengan instrumen derivatif.
Apakah Fungsi Manajemen Resiko
Menetapkan arah dan risk appetite dengan mengkaji ulang secara berkala dan menyetujui risk exposure limits yang mengikuti perubahan strategi perusahaan
Menetapkan limit umumnya mencakup pemberian kredit, penempatan non kredit, asset liability management, trading dan kegiatan lain seperti derivatif dan lain-lain
Menetapkan kecukupan prosedur atau prosedur pemeriksaan (audit) untuk memastikan adanya integrasi pengukuran resiko, kontrol sistem pelaporan, dan kepatuhan terhadap kebijakan dan prosedur yang berlaku
Menetapkan metodologi untuk mengelola resiko dengan menggunakan sistem pencatatan dan pelaporan yang terintegrasi dengan sistem komputerisasi sehingga dapat diukur dan dipantau sumber resiko utama terhadap organisasi Bank
Kerangka Manajemen Resiko
Identifikasi Resiko dilaksanakan dengan melakukan analisis terhadap karakteristik resiko yang melekat pada aktivitas fungsional, Resiko terhadap produk dan kegiatan usaha
Pengukuran resiko dilaksanakan dengan melakukan evaluasi secara berkala terhadap kesesuaian asumsi, sumber data dan prosedur yang digunakan untuk mengukur resiko , Penyempurnaan terhadap sistem pengukuran resiko apabila terdapat perubahan kegiatan usaha, produk, transaksi dan faktor resiko yang bersifat material
Pemantauan Resiko dilaksanakan dengan melakukan evaluasi terhadap eksposure resiko Penyempurnaan proses pelaporan terdapat perubahan kegiatan usaha, produk, transaksi, faktor resiko, teknologi informasi dan sistem informasi manajemen yang bersifat material Pelaksanaan proses pengendalian resiko, digunakan untuk mengelola resiko tertentu yang dapat membahayakan kelangsungan usaha
Jenis ResikoResiko Kredit
Dimana resiko yang timbul akibat kegagalan (default) dari pihak lain(nasabah/debitur/mudharib dalam memenuhi kewajibannya.
Resiko Kredit dapat terjadi pada aktivitas : Pembiayaan, Treasuri dan Investasi, pembiayaan dan perdagangan
Kegagalan client untuk membayar kembali murabahah installment
Kegagalan client untuk membayar (repayment scheduled) Ijarah
Kegagalan client untuk membayar kembali (repayment scheduled) Istishna
Kegagalan client untuk mengirimkan komoditi yang sudah dibeli (salam)
Dll
Pengelolaan Resiko
Collateral
Pricing (higher margin for Higher risk)
Diversification (Wide geographical and industrial speed)
Client Credit Rating
Contoh :Pemberian pembiayaan kepada nasabah dengan jangka waktu 12 tahun, padahal masa kerja nasabah tinggal 5 tahunPembiayaan IjarahResiko yang timbul dan penyebabnya :
Jika barang milik bank, timbul resiko tidak produktifnya asset iajarah karena tidak adanya nasabah
Jika barang bukan milik bank, timbul resiko rusaknya barang oleh nasabah karena pemakaian tidak normal
Dalam hal jasa tenaga kerja yang disewakan bank kemudian disewakan kepada nasabah, timbul resiko tidak performnya pemberi jasa.
Penyelesaian
Resiko yang timbul karena ketiadaan nasabah merupakan bussines risk yang tidak dapat dihindari
Jika resiko timbul karena pemakaian di luar normal, Bank dapat menetapkan kovenan ganti rugi kerusakan barang yang tidak disebabkan oleh pemakaian normal
Jika resiko yang timbul karena tidak perform-nya pemberi jasa, Bank dapat menetapkan kovenan bahwa resiko tersebut merupakan tanggung jawab nasabah karena pemberi jasa dipilih sendiri oleh nasabah
Pembiayaan Ijarah Muntahiya Bit Tamlik (IMBT)Resiko : ketidakmampuan nasabah membayar angsuran dalam jumlah besar di akhir periodePenyebab : Jika pembayaran dilakukand dengan sistem Ballon Payment (pembayaran angsuran dalam julah besar di akhir periode)Solusi : memperpanjang jangka waktu sewaPembiayaan Salam dan IstishnaKarena kedua skim ini barang diserahkan di akhir akadResiko : Resiko gagal serah barang dan resiko jatuhnya harga barangSolusi :
Resiko jatuhnya harga barang diantisipasi dengan menetapkan bahwa jenis pembiayaan ini hanya dilakukan atas dasar kontrak/pesanan yang telah ditentukan harganya.
Resiko gagal serah dapat diantisipasi bank dengan menetapkan kovenan resiko kollateral 220 %, yaitu 100 % lebih tinggi daripada rasio standar 120 %.
Pembiayaan Mudharabah/MusyarakahPenilaian Resiko meliputi :Resiko Bisnis yang dibiayaiResiko berkurangnya nilai pembiayaan mudharabah/musyarakahResiko karakter untuk mudharib/musyarik/nasabah
Resiko Pasar
Resiko yang timbul akibat adanya perubahan variabel pasar, seperti : suku bunga, nilai tukar, harga equity dan harga komoditas sehingga nilai portofolio/asset yang dimiliki bank menurun
Berdasarkan bank Indonesia, sebagai bank umum dengan prinsip syariah, maka Bank Syariah hanya perlu mengelola resiko pasar yang terkait dengan perubahan nilai tukar yang dapat menyebabkan kerugian Bank.
Alasan timbulnya resiko suku bunga§ Ketidaksesuaian (mismatch) atau gap antara suku bunga dari aset dan kewajiban§ Peningkatan pada :§ Ukuran dari mismatch§ Fluktuatif market rates§ Pengelolaan resiko bunga :- Membuat limit posisi untuk mismatch- Hedging (financial future)- Pengelolaan dengan teknik statistik : Duration analysis, Simulation Models
Bank Syariah tidak berhadapan dengan resiko suku bunga, tetapi berhadapan dengan pricing risk atau dikenal dengan Direct Competitor market rate (DCMR)
Bank Syariah juga berhadapan dengan Indirect Competitor Market rate (ICMR) suku bunga konvensional
Pricing pada perbankan syariah yang berhubungan dengan resiko suku bunga :

Profit Murabahah tidak dapat ditingkatkan seiring dengan meningkatnya suku bunga
· Harga komoditi (salam) ditetapkan dan dibayar dimuka pada saat kontrak/akad ditandatangani
· Ijarah ditetapkan diawal tetapi dapat dinegoisasikan kembali di kemudian hari jika kondisi ini telah ditetapkan sebelumnya didalam kontrak/akad
· Rasio bagi hasil (Mudharabah & Musyarakah) ditetapkan diawal namun dapat dinegoisasikan kembali dikemudian hari jika nasabah (Counterparty) setuju
· Pricing Bank Konvensional akan mempengaruhi pricing di perbankan syariah
Pembiayaan MurabahahResiko : Tidak bersaingnya bagi hasil kepada dana pihak ketigaPenyebab :Kenaikan DCMR (Direct Competitors Market Rate)Kenaikan ICMR (InDirect Competitors Market Rate)Kenaikan ECRI (Expected Competitive Return For Investors)Solusi :
Menetapkan jangka waktu maksimal pembiayaan dengan mempertimbangkan :
Tingkat (marjin) keuntungan saat ini dan prediksi perubahan di masa mendatang yang berlaku di pasar perbankan syariah (DCMR) semakin cepat perubahan DCMR, semakin pendek jangka waktu maksimal pembiayaan
Suku bunga kredit saat ini dan prediksi perubahannya di masa mendatang yang berlaku di pasar perbankan konvensional (ICMR). Semakin cepat perubahan ICRM, semakinpendek jangka waktu maksimal pembiayaan
Ekspektasi bagi hasil kepada Dana Pihak Ketiga yang kompetitif di pasar perbankan syariah. Semakin besar perubahan ekspektasi tersebut diperkirakan akan terjadi semakin pendek jangka waktu maksimal pembiayaan.
Resiko Nilai Tukar (Foreign Exchange rate Risk)Resiko yang muncul karena pergerakan (dengan arah) yang merugikan dari nilai tukarForeign currency bussinessBorrowing atau Lending dalam valuta asingResiko nilai tukar meningkat apabila:
Bank mengambil posisi dengan jumlah besar dalam valuta asing
Pasar menjadi lebih fluktuative (Volatile)
Pengelolaan resiko Nilai Tukar
Seeting limit untuk posisi valuta asing
Menggunakan teknik hedging (hedge by other transaction)
Contoh Resiko PasarTanggal 5 Juli Cabang A Bank Zulfikar Syariah membeli bank notes dari nasabah sebesar USD 10.000,00 kurs 9.700 dan pada akhir hari cabang lupa/lalai untuk menjual ke money changer atau melakukan pelimpahan kekantor pusat. Keesokan harinya cabang baru mengingat dapat menjualnya dengan kurs 9.600, dan bagaimana pula jika kurs menjadi Rp. 9800Resiko LikuiditasResiko likuiditas pasar dimana resiko yang timbul karena bank tidak mampu melakukan offsetting tertentu dengan harga karena kondisi likuditas pasar yang tidak memadai atau terjadi gangguan dipasarResiko likuditas pendanaan dimana resiko yang timbul karena bank tidak mampu mencairkan assetnya atau memperoleh pendanaan dari sumber dana lain
Contoh Resiko Likuiditasi pasarBank Zulfikar Syariah memberikan bagi hasil yang tidak wajar misalkan 80% (eq.rate 12 %) agar nasabah dana mau menyimpan dananya padahal pada saat yang bersamaan pasar hanya eq. rate 8.5 %
Contoh Likuiditas PendanaanBank Zulfikar Syariah pada saat membutuhkan likuditas, Bank Zulfikar Syraiah tidak mampu menjual obligasi yang dimilikinya walaupun sudah diberikan discount cukup besarResiko Likuiditas adalah bank tidak mampu memenuhi kewajiban yang telah jatuh tempo karena kekurangan likuiditas (cash dan ekuivalen)Peristiwa resiko likuiditas antara lain :
Tingkat dimana dibutuhkan penambahan dana dengan biaya tinggi dan atau menjual aset dengan harga discount
Ketidaksesuaian jatuh tempo (maturing mismatch) anntara eraning assets dan pendanaan.
Pinjaman jangka pendek (borrow short) dan pembiayaan jangka panjang (lend long) dengan spread yang lebar.
Kontrak mudharabah mengijinkan nasabah untuk menarik dananya setiap saat tanpa pemberitahuan.
Faktor yang meningkatkan resiko likuiditas§ Penurunan kepercayaan terhadap sistem perbankan§ Penurunan kepercayaan terhadap suatu Bank§ Ketergantungan kepada deposan inti§ Berlebihnya dana jangka pendek atau long term asset§ Keterbatasan secara Syariah pada asset securization karena pembatasan untuk menjual utang (sale of debt)Mitigasi Resiko Likuidasi§ Diversifikasi terhadap sumber pendanaan§ Tersedianya hubungan dengan sumber/kelompok pendanaan§ Pemeliharaan terhadap tingkat/level likuiditas (cash,money at call, marketabe securities)§ Arranging standby facilities§ Skema Asuransi pendanaan kontrol atas kesesuaian maturity assets dan liabilitiesResiko LegalResiko yang disebabkan oleh adanya kelemahan aspek yuridis, yang anatara lain disebabkan :§ Adanya tuntutan hukum§ Ketiadaan peraturan perundang-undangan yang mendukung§ Kelemahan perikatan seperti :- Tidak dipenuhi syarat sah kontrak- Pengikatan agunan yang tidak sempurnaResiko ReputasiResiko reputasi disebabkan antara lain :§ Publikasi negativ yang terkait dengan kegiatan usaha bank terutama dengan pemberitaan media massa§ Persepsi negative terhadap bank§ Kehilangan kepercayaan dari costumer, counterpart atau regulatorAlasan kehilangan reputasi- Kesalahan manajemen- Tidak mematuhi hukum yang berlaku- Skandal keuangan- Ketiadaan kemampuan dalam mengelola, integritas kesehatan Bank- Resiko ini sulit diukur apalagi terkait dengan persepsi nasabahResiko StrategikResiko yang antara lain disebabkan :§ Adanya penetapan strategi dan/atau pelaksanaan strategi bank yang tidak tepat§ Pengambilan keputusan bisnis yang tidak tepat§ Kurangnya responsif bank terhadap perubahan eksternalResiko kepatuhanResiko yang disebabkan bank tidak memenuhi atau tidak melaksanakan peraturan perundang-undangan dan ketentuan yang berlakuPada prakteknya resiko yang terkait dengan pertauran seperti :-CAR-KAP-PPAP-BMPK-PDN-Pajak-dan sebagainyaResiko OperasionalResiko yang timbul akibat tidak berfungsinya :§ Proses Internal :pelanggaran prosedur dan ketentuan, pelanggran kontrol (proses review produk baru, berkaitan dengan desain dan implementasi produk baru, kontrol terhadap pelaksanaan produk jasa yang sudah ada§ Kesalahan manusia : Hubungan antar pegawai (Discriminasi, pelecehan seksual), kesalahan pegawai, penyimpangan pegawai, tidak terpenuhinya jumlah pegawai§ Kegagalan Sistem : kegagalan hardware, kegagalan software, konfigurasi lemah (tanpa perlindungan virus), komuniaski (saluran telpon tidak berfungsi, kapasitas jaringan tidak mendukung)§ Problem Eksternal : Kejahatan eksternal (pencurian, penipuan, pemalsuan), Bencana faktor alam (gempa Bumi, banjir, topan,sunami) Faktor manusia (perang, terorisme, perampokan), penerobasan sistem teknologi (hacker, penembusan user id)Yang dapat mempengaruhi operasional bank dan merugikan§ Melekat pada setiap aktivitas fungsional perbankan :- Pembiayaan- Operaional & jasa- Pendanaan & instrumen hutang- Teknologi & Sistem Informasi- Treasury & investasi- Pembiayaan perdagangan- Sumber Daya Insani- Aktivitas umum

HASRAT HIDUP

By : Haris Fadly Syahri

Intro : Am, G, F, E
Am, G, E7

Gemuruh angin ombak lautan

Yang kian hari kian berubah

Cita-cita keinginan

Yang kian hari kian bertambah

Manusia dan keinginan

Itu hanya lah sebuah hiasan ...

**

Alam raya yang bernyanyi

Menyanyikan lagu impian

Kita semua tak berarti

Menghadapi semua takdir Tuhan

Tak ada jalan tuk berlindung

Hanya kepada-Nya lah memohon ...

*Bridge*

Hasrat hidup memanglah bermacam-macam

Hingga hayalan pun menjadi harapan

Manusia yang tak habisnya berangan-angan

Hingga harapan pun menjadi impian

*Chorus*

Berharaplah yang nyata tuk mewujudkan harapanmu

Dan janganlah berharap yang tak pasti

Singsingkanlah bajumu tuk menggapai harapanmu

Karna itulah yang mulia bagimu

ISLAMIC ECONOMICS SYSTEM

The economic backwardness of the Muslim world since the beginning of the industrial revolution in the West in the 18th/19th century can hardly be disputed. There basically two groups of explanations for this phenomenon:
The first group emphasizes mentality factors and a mindset originating from the Islamic worldview which induces behavioural patters impeding economic development.The second group stresses institutional factors and deficits originating from a particular historic constellation responsible for the lack of institutions necessary for economic development.
Mentality and institutional deficits may explain the economic backwardness of the Muslim world, by neither mindsets nor institutions are immune to change, and the present shape of both cannot mainly be attributed to Islam. On the contrary, an economic policy based on Islamic principles may be more conducive to economic development than the socialist experiments, nepotism and state interventionism of past decades.
1. ‘Islamic mindset’ as an obstacle to economic development?It is often argued that the Islamic worldview supports a mentality and value system which attributes little importance to individual performance and responsibility, effectiveness and efficiency or material wellbeing. Muslims are more concerned with the life in the hereafter. They belief in a kind of predetermination, and all these components lead, in total, to a fatalistic attitude which seriously obstructs economic development.
It is doubtful whether this is an accurate description of the value orientation and behaviour of the vast majority of Muslims. But even if it could be observed in today’s Muslim societies, it is very doubtful whether it can be ascribed to the teachings of Islam. An alternative explanation is that seclusive attitudes are a reflex and response to the experience of many generations that individual efforts and endeavours do not pay in repressive systems. Fatalism stands in a strange contrast to the economic teachings and ideology of Islam. The literature on Islamic economic teachings (ranging from business ethics to systemic issues) explicates and propagates attitudes and concepts which come close to what we would call a social market economy. Major elements are the following:• Everybody is obliged to cater for subsistence by his/her own labour.• The final owner of everything is Allah. Man has only the right of use but no right to waste or destroy it. Private property of means of production is permissible but must not be misused. Wealth can be acquired legitimately through work and inheritance. It should not be used for lavish or luxury consumption, and the use for social purposes is encouraged (and rewarded in the hereafter).• The poor and needy have a claim to be sustained by the society. This claim is institutionalized in the system of zakat (sometimes translated as poor due or alms tax), a compulsory levy of 2.5% on assets and 5% or 10% on agricultural produce and earmarked for a list of purposes initially outlined by the Prophet Muhammad and further specified by the early caliphs.• Prices should be just - which means that they should be formed on competitive markets. Monopolization and hoarding lead to exploitation and must be combated.
• The monetary policy must ensure the stability of the price level.The fiscal policy should balance tax income and public expenditures in such a way that the overall budget will be balanced (no deficit spending).
• The state shall provide a basic infrastructure (including a legal system) and specific public goods but must not intervene into competitive markets.Islamic economic teachings imply or plead for a set of institutions (private property, enterprises, capital markets, anonymous markets, labour laws, competition, etc.) deemed crucial for the rapid economic development which took place in the West since the 18th century. However, such institutions either did not exist in the Muslim world until rather recently or were not effective. Their introduction was often initiated from outside, for example in the context of structural adjustment programmes and policy reform packages under the guidance of the International Monetary Fund. An explanation for this phenomenon is offered in the following section.
2. Institutional deficits in the ‘Islamic heartlands’Islamic economics emerged only since the mid-1970s as a new academic discipline (a mixture of positive and normative economics with a strong ideological dimension), and seemingly teachings such as those quoted above do not adequately reflect the realities of the economic systems of Muslim countries. In particular, they cannot explain the institutional deficits. It is often assumed that the traditional Islamic law could neither provide an adequate protection of individual property rights nor could it accommodate to institutional innovations and structural changes in particular from the 18th century onwards when the industrial revolution changed the economic and social systems in Europe and initiated an unprecedented economic development there.
Obviously, the Ottoman Empire - which ruled most of the Islamic heartlands in the Middle East and North Africa (MENA) - did not create adequate institutions during this crucial historical period. But this failure must not be attributed to an alleged rigidity of the traditional Islamic law. There are other - probably much more important - explanatory factors:When the territorial expansion of the Ottoman Empire came to a halt and the disintegration of the periphery began (in the 17th/18th century), the Ottoman rulers could no longer buy the loyalty of their governors and military leaders by the distribution of newly conquered land. Instead, they had to extract rewards from the own territory, and they adopted on a large scale a system of tax farming. In a period of retreat and decline, tax-farmers tried to maximize their income in the short term and often set tax rates to confiscatory levels. This undermined private property and made it irrational to build-up immobile real assets (including production facilities) exposed to the access of the tax-farmers. It was much better to keep capital as liquid and invisible as possible.
This explains a strong preference of the entrepreneurs of that period for trade ventures and a strong aversion against factories and industrial plants. The military and economic decay of the Ottoman Empire in the 19th century was in sharp contrast to the industrial revolution, which spread throughout Europe. It was driven by private entrepreneurship and private capital, and crucial institutions such as joint stock companies and capital markets developed during that period. Nothing comparable took place in the MENA region - neither in the Ottoman heartland nor in the Arab periphery which came under European colonial control in the 1800s. When countries in the MENA region gained independence in the 20th century, either nepotism in autocratic regimes or state bureaucracies in socialist systems dominated the economies and suppressed entrepreneurial potentials (outside established elites) and hindered the emergence of institutions essential for the functioning of competitive markets which, in turn, are the driving force behind economic development. This changed only in the last decade when the recognition of entrepreneurship and private property and the market paradigm became guiding principles for economic reforms all over the world, including the MENA region.
3. The riba problemEven if the Islamic mentality and the basic institutional setup of an Islamic economy is supportive to development, one must not ignore one distinctive element in the Islamic economic teachings with institutional implications which may turn out as a fundamental obstacle for development, namely the prohibition of riba - which means all kinds of interest (and not just usury) related to a loan. It must be noted that riba is prohibited for loan transactions only, i.e. it is limited to purely financial transactions. A trade transaction, where one party transfers an asset (good or non-financial service) and the other party transfers money, does not create interest but profit. This is true even if the financial transfer happens at a later date and the seller adds a mark-up on the spot price for the deferred payment. In this respect rent is similar to trade. Interest is created only if both transactions are financial in nature. While interest is prohibited, profit from trade is allowed, and even in an interest-free economy capital has a price.
The sector which needed - for centuries in Islamic history - the most sophisticated forms of finance was trade. Islamic jurists developed a comprehensive and sophisticated corpus of contracts for the financing of various types of trade transactions. All these contracts avoided interest. The more entrepreneurial and venturous transactions (such as long distance trade expeditions) were financed on the basis of profit and loss sharing. In more standard transactions (especially local trade) financing was not done by interest-bearing loans but by mark-ups on the spot price for the deferred payment of the purchased items.
When trade ventures and their financial needs became more complex, double trade techniques were introduced. In its extreme form, two reverse trade contracts are combined in such a way that they made interest-bearing loans commercially possible without recourse to the legally prohibited loan contracts. In principle, in the first contract party A sells to party B an object at a price P, and B pays the price on spot to A. In the second contract, party A immediately (re-) purchases the same object from party B at a price of P + X, payable after a certain period of time. Factually, party A never gave up the possession of the traded object, and party A received a loan from B amounting to P at a fixed cost X which is interest in economic terms (but profit from trade and deferred payment in legal terms). Seemingly such financing techniques facilitated flourishing trade, crafts and agriculture in the ‘Golden Age’ of Islam - even without banks in the modern sense. However, sceptical observers fear that a more complex modern economy without interest would be an economy without financial intermediation and without capital markets. This, in turn, would seriously jeopardize an economic system based on private property, entrepreneurship, and competition. The emergence of Islamic banks and interest-free financial markets over the last 30 years cannot dispel the reservations in total, but there are clearly recent trends towards a more sophisticated and efficient Islamic financial system with links to conventional national and global financial markets.
When Islamic banking emerged in the 1970s/1980s, its proponents strongly emphasized the profit and loss sharing techniques and portrayed an ideal economy based on equity and partnership. This economy was deemed more efficient, just and stable than the conventional capitalist and interest-based system, and it was expected that it would boost the economic development of the Muslim world after its introduction and spreading. The reality of Islamic banking did not meet the high expectations: Instead of providing capital on the basis of profit and loss sharing, Islamic banks acted as traders on behalf of their clients and bought and sold objects with mark-ups and mark-downs and rented or leased objects against fixed rental charges or leasing rates. It is debatable whether and to what extent Islamic banks applied double trade techniques. Profit and loss sharing was only applied in relation to depositors:Money paid into so-called savings or investment accounts does not receive a fixed interest but a share of the profit (or loss) of the bank. Although Islamic banks were able to meet the basic financial needs of their customers, the early system as such was incomplete, more complicated, less efficient and inferior to conventional banks due to high transaction costs. But the number of Islamic financial institutions and their funds under management increased rapidly since the 1990s, and more and more conventional global players such as HSBC or Citibank and recently even Deutsche Bank joined the Islamic segment with new financial products, separate departments (’windows’) or subsidiaries. The new actors no longer restrict themselves to the traditional financing techniques of previous centuries but have engaged massively in financial engineering. They developed not only new interest-free banking techniques but also instruments for interest-free capital markets (such as sukuks as alternative to conventional bonds).
Today’s Islamic bankers are not worried about systemic superiority (as were the Islamic economists in the 1970s/1980s) but are content with the legal Shariah compliance of their new techniques and products. Their prime objective is no longer ideology but market performance. New interest-free tools as such hardly promote development, but efficient techniques are by all means a necessary precondition. The replacement of outdated techniques removes some impediments to the progress of Islamic finance and thus enhances he chances for an integration of an Islamic economic subsystem into secular market oriented economic systems in Muslim countries. This tendency is supported by authorities for supervision and regulation of financial institutions and markets (= central banks, monetary authorities, etc.) in many Muslim countries: They observe with great interest the formulation of accounting and auditing standards issued by organizations of the Islamic finance industry (such as the Accounting and Auditing Organization for Islamic Financial Institutions), and many of them actively participate in the design of regulatory standards (primarily in the framework of Islamic Financial Services Board). Both types of standards have only the legal quality of recommendations, but these recommendations are translated into authoritative standards by governments and central banks of an increasing number of Muslim countries.
The improvement of techniques, the refinement of accounting standards, and the regulatory integration into existing financial systems clearly remove possible obstacles which might originate from the prohibition of interest. It remains to be seen whether the modernized Shariah compliant financial toolbox will be used by ideologically motivated bankers in order to address the financial needs of new entrepreneurs, self-employed people, local communities etc. who so far are widely neglected by conventional banks. If this happens, Islamic finance could make a distinctive contribution towards the development of a Muslim country - even if the overall economic system remains mainly secular.