Includes bibliographical references and index.

Machine generated contents note: 1.Introduction
1.1.Background
1.2.Importance of Financial Innovation: Realising the Potential
1.3.What Makes a Bank Islamic
1.4.Values Embedded in the Islamic Banking Products
1.5.If All Banks Adopted Islamic Values, Would There Have Been a Banking Collapse?
1.6.Significance of this Book
1.7.Motivation of the Book
1.8.Objectives of this Book
1.9.Contribution of the Book
1.10.Potential Implications of this Book
1.11.Outline of the Book Chapters
2.The Context of Islamic Banking and Finance
2.1.Introduction
2.2.Defining Islamic Finance
2.3.The Prohibition of Riba in Islamic Finance
2.4.The Ethical Basis of Islamic Finance
2.5.The Concept of Growth and Purification in Finance
2.6.Islamic Finance Instruments
2.7.Shariah Compliance and Governance (SCG) of Islamic Financial Institutions (IFI)
2.8.Duties and Responsibilities of the SSC
2.8.1.Concept and Structure of Financial Products
Contents note continued: 2.8.2.Documentation
2.8.3.Shariah Advisory
2.8.4.Providing Shariah Legal Opinion
2.8.5.Undertaking Shariah Compliance Audit
2.9.Major Differences Between IFIs and Their Conventional Counterpart
2.10.Financial Innovation and Engineering
2.10.1.Scope of Financial Innovation and Engineering
2.10.2.Innovation and New Product Development in Finance
2.11.Conclusion
3.Analysis of Financial Innovation and Engineering in the Literature
3.1.Introduction
3.2.Differences Between Islamic and Conventional Banking
3.3.The Difference Between Usury (Riba) and Interest
3.4.Emergence of Islamic Banking
3.5.Islamic Banking and Finance: Critics and Defenders
3.6.Innovation
3.6.1.Definition of Innovation
3.6.2.Nature and Theory of Financial Innovation
3.6.3.Three Schumpeterian Schools of Innovation
3.6.4.Innovation Orientation
3.6.5.The Relation Between Innovation and Financial Crisis
3.7.Product Development
Contents note continued: 3.7.1.Definition of Product Development
3.7.2.Importance of Product Development
3.7.3.Product Development Process
3.7.4.Product Development in Islamic Banking
3.7.5.Islamic Ethics and Financial Product Development and Engineering
3.8.Regulatory Challenges
3.9.Risks in Islamic Banking
3.9.1.Credit and Market Risks
3.9.2.Operational Risk Exposure of Islamic Banks
3.9.3.Impacts of Basel III on Islamic Banks
3.9.4.Liquidity in Islamic Banks
3.10.Corporate Governance
3.11.Islamic Economics and Ethics
3.12.Legal Stratagems (Hiyal) in Islamic Commercial Law
3.13.The Role of Islamic Finance in Tackling Financial Exclusion...
3.14.Conclusion
4.A Historical Analysis of Financial Innovation in Islamic Economics and Finance from Inception to the Sixteenth Century
4.1.Introduction
4.2.Phases of the History of Islamic Finance and Its Innovation
4.2.1.Phase 1: Formation (622
661)
Contents note continued: 4.2.2.Phase 2: Growth and Stability (Seventh
Tenth Century)
4.2.3.Phase 3: Decline (Tenth
Thirteenth Century)
4.2.4.Phase 4: Partial Growth (Thirteenth
Sixteenth Century)
4.3.Conclusion
5.A Historical Analysis of Financial Innovation in Islamic Economics and Finance from the Sixteenth Century to Present
5.1.Introduction
5.2.Phase Five: Youthfulness (Sixteenth to Nineteenth Century)
5.3.Phase Six: The Decline of the Ottoman State and Subservience to the West (from the Beginning of the Nineteenth Century to 1970)
5.4.Phase Seven: Islamic Finance Revivalism (1950s
1960s)
5.5.Phase Eight: Interest-Free Islamic Banking (1970s
Present)
5.5.1.Emergence of Islamic Banking
5.5.2.An Empirical Account on Islamic Banking in the West
5.5.3.Evolution of Islamic Banking in South East Asia, Pakistan and Iran
5.5.4.Various Approaches to Shariah Governance
5.6.Conclusion
6.Traditional Theory of Financial Innovation
Contents note continued: 6.1.Introduction
6.2.Analysis of the Role Played by Financial Innovation in Creating Financial Crises
6.3.Fundamental Elements Influencing the Financial Market
6.4.The Resilience of the Banking System: A Key Factor in the On-Going Financial Crises
6.5.The Race by Financial Institutions to Develop Sophisticated Financial Products
6.6.The Root Cause of Financial Crises
6.7.What Is Financial Innovation?
6.7.1.Financial Innovation in History
6.7.2.What Drives Financial Innovation?
6.8.Undesirable Consequences of Innovation
6.9.Pro-Innovation Bias
6.10.Three Schools of Innovation
6.10.1.The Corporate Entrepreneurial School: A Social Perspective
-Innovation as Grassroots Impetuses
6.10.2.The Cultural School: A Cultural Perspective
-Nature of Innovation: Deep Craft
6.10.3.The Capability School: An Economic Perspective
-Innovation as Institutionalised Capability
6.11.Conclusion
Contents note continued: 7.Financial Innovation Theory from an Islamic Perspective
7.1.Introduction
7.2.Four Schools of Innovation
7.3.Definition of Innovation from an Islamic Perspective
7.4.The Islamic School of Financial Innovation
7.5.The Mechanics of Financial Innovation: The Role of Jurisprudence
7.6.The Application of Normativity Through Social Practices: Bourdieu's Theory
7.7.Socially Useless Financial Innovation
7.8.Economic Thought in the Qura'an and the Sunnah, Basic Philosophy for Financial Innovation Theory
7.8.1.The Concept of Unity, Tawhid
7.8.2.The Concept of Vicegerency, al Khilafah
7.8.3.The Concept of Free Will and Responsibility, al-Iradah wa al-Masu 'wliyyah
7.9.Islamic Economic Principles: The Fundamentals for an Islamic Theory of Innovation
7.9.1.The Principle of Moderation (I'atidal) in Financial Innovation
7.9.2.The Principle of Economic Efficiency in Financial Innovation
Contents note continued: 7.9.3.The Principle of Social Justice (al-A 'adalah al-Ijtima 'iyyah) in Financial Innovation
7.10.Application of the Basic Islamic Philosophy in Financial Innovation
7.11.The Origins of Shariah Supervision and Governance
7.12.Conclusion
8.Futures Contracts as an Underlying Product of Financial Engineering in Islamic Finance
8.1.Introduction
8.2.Definition of Futures
8.3.Financial Futures
8.4.Hedging Mechanism Through Derivatives
8.4.1.Objective of Hedging
8.4.2.Hedging Using Options
8.4.3.Hedging Interest-Rate Risk with Financial Futures
8.5.Futures from an Islamic Perspective
8.6.Problems Related to Futures Markets from an Islamic Finance Perspective
8.7.Al-Gharar (Uncertainty) in the Futures Market
8.8.Conclusion
9.Options Contracts as an Underlying Product of Financial Engineering in Islamic Finance
9.1.Introduction
9.2.What Is an Option
9.3.A Brief Historical Review of Options
Contents note continued: 9.4.Types of Options
9.4.1.Call Option
9.4.2.Put Option
9.4.3.Double Options
9.5.Why Options Are Popular
9.6.Useful Economic Purposes Served by Options
9.7.Market Analysis of Options
9.8.An Assessment of Options from an Islamic Finance View
9.9.Options in the Islamic Literature
9.10.Some Possible Shari'ah Objections to Options
9.11.Khiyar as a Form of Option
9.11.1.Main Typical Types of al-khiyarat (Options) as Validated by the Sunnah
9.12.Options and Islamic Jurisprudence
9.12.1.Call Option
9.12.2.Put Option
9.12.3.Index Option
9.12.4.Right as an Object of Sale
9.13.The Framework of Khiyar al-Shart and Daman (guarantee)
9.14.Similarity Between Options and Bai' al-'Arbun (Down-Payment Sale)
9.15.Conclusion
10.Outlining a Framework for Financial Innovation and Engineering in Islamic Finance
10.1.Introduction
10.2.Affiliated Risk with Options Contracts
Contents note continued: 10.3.Al-Gharar (Uncertainty) in the Option Market
10.4.The Issue of Riba (Usury) Associated with Options
10.5.The Rationale of Prohibiting Conventional Options
10.6.Muslim Economists Point of View
10.7.Options from usul al-Fiqh (The Sources of Law) Point of View
10.7.1.Istihsan
10.7.2.Al-maslaha al-mursala (Common Good)
10.8.Financial Contracts with Embedded Khiyar al-Shart
10.9.Managing Price Risk with khiyar al-shart
10.10.Istijrar Sale with Khiyar al-Shart
10.11.Exclusions from Option Contracts
10.12.Conclusion
11.Case Study: Analysis of Selected Shariah Compliant Financial Products
11.1.Introduction
11.2.Scope of the Documentary Analysis
11.3.Findings of the Case Study Through Documentary Analysis
11.3.1.Documentary Analysis of an Investment Product
11.3.2.Documentary Analysis of a Home Finance Product
11.3.3.Documentary Analysis of a Derivative Product
Contents note continued: 11.3.4.Documentary Analysis of Sukuk (Equity Based Islamic Certificate) Issue
11.4.Summary of the Documentary Analysis Findings
11.5.Conclusion
12.Discussion and Conclusion
12.1.Introduction
12.2.Discussion
12.3.Book Contribution
12.4.Policy Implications
12.5.Case Study of a New Shariah Compliant Financial Innovation (Takaful Student Finance)
12.5.1.Background of the Financial Innovation
12.5.2.The Analytical Process That Led to a Solution for the Alternative Student Finance
12.5.3.Takaful as a Solution for the Alternative Student Finance
12.6.Conclusion
12.7.Avenues for Future Research.

This book provides two important contributions to existing theories in the financial innovation literature. First, it extends the existing literature of innovation orientation to a completely new field and construct that is based on a religious imperative as a framework within which financial innovation is constrained. It explains how an innovation orientation in IFIs can be directed within religious rules, which indicates that innovation orientation in IFIs is a learning philosophy. Second, the book introduces and examines the plasticity of Shariah as a shared boundary object and its dynamic role in managing tension and conflicting values in the financial innovation process. Furthermore, building on the empirical results, the study illustrates the insights that each theoretical lens affords into practices of collaboration and develops a novel analytical framework for understanding religious orientation towards financial innovation. This practical contribution, of the developed framework, could form the basis for a standardized framework for the Islamic finance industry. The book concludes by noting the policy and managerial implications of its findings and provides directions for further research.