Research Summary
Research Summary
Islamic Financing Practices
By: Samuel L. Hayes
Description
Samuel L. Hayes III is examining (with faculty of Harvard University's Law
School and Center for Middle Eastern Studies) Islamic banking and
investment practices. Because the Koran prohibits the payment of fixed
interest and guarantees on funds invested either with a banking
intermediary or directly in an investment project, conventional western
deposit and lending instruments often do not conform to Islamic religious
tenets. Yet a number of Middle Eastern banks conduct business in
compliance with the religious laws of Islam, and the national banking
systems of Iran, Sudan, and Pakistan are founded on Islamic law. Hayes is
exploring the composition of this market and the prospects for its growth
in the context of the global capital market. He is also examining the
structure of financings characterized as Islamic to determine how they
differ from conventional Western practice. Finally, Hayes is looking at a
number of financial packaging combinations made possible by the development
of derivative securities to see if they might meet the investment
objectives of devout Muslims.