The purpose of the research is to study the types of liquidity problems in Islamic banks, to analyse the causes of liquidity problems along with their impacts on Islamic banking industry with the objective of finding solutions to the liquidity problems of Islamic banking industry (IBI). The study design was based on primary research conducted through development of a questionnaire along with the interviews of Shariah advisors. The questionnaire was distributed among the Islamic bankers engaged in liquidity management process working at senior and middle management level. The study initially examined liquidity problems in Islamic banks along with the mitigation techniques employed by the Islamic banking industry to control them. Thereafter, the study highlighted shortfalls in bank practices or non-availability of Shariah compliant mitigation tools. Finally, the study discussed Shariah compliant mitigation techniques to tackle different kinds of liquidity problems in Islamic banks and suggested solutions to the problems. The study revealed that liquidity problem in IBI consists of two opposite facets i.e. surplus liquidity and liquidity crunch and most of the Islamic banks faced both kinds of liquidity problem at different times. The study further elaborated key factors affecting liquidity position of Islamic banking industry. The study also found that the role of Shariah advisors is all the more important in IBI. The results of the research divulge that Islamic banks can solve liquidity problem through issuance of sukuk bonds against their long term portfolio as well as through the development of common Musharika pool to be regulated by Central bank. The paper may be of value to the global IBI, central banks as well as conventional banking industry, academic institutions along with researchers for additional research.

Keywords: Liquidity Management, Islamic Banks, Financial Institutions, Shariah, Mitigation Techniques, Islamic Financial Institutions.

This paper investigates the efficiency of Islamic Banking in Pakistan. A sample of nine banks operating in Pakistan including five full-fledge Islamic Banks and four Islamic Windows of conventional banks have been subjected to data envelopment analysis (DEA). Data span is of five years from year 2007 to 2011. Technical efficiency, allocative efficiency, scale efficiency and TFP scores have been calculated using DEA. Empirical results reveal that six banks were found efficient in year 2007, eight in 2008, seven in 2009, five in 2010 and six in 2011 under CRS. Total factor productivity of the Islamic banking sector has increased in the period under review, whereas change in total factor productivity was mainly contributed by the technological change

instead of technical efficiency change. Keywords: Islamic Banking, Total Factor Productivity, Data Envelopment Analysis, Malmquist Index.

Small and Medium Enterprises ("SMEs") have been recognized as one of the most important component that contributes towards the economic growth of many countries around the world. Despite its importance, SMEs have limited access to external financing that is dominated by debt financing. They have difficulty in fulfilling debt requirements particularly in providing collateral, coping with high interest/ profit payment and adapting to credit rationing. Such limitations curb their growth and expansion. Therefore, there is a need to explore an alternative financing, which is more accessible by SMEs. This study examines the viability of Musharakah as an alternative financing mode for SMEs. Quantitative method is adopted in this study. Questionnaires were self-administered, using drop-off method, to a sample of 100 SMEs firms in Klang Valley and Selangor, Malaysia. The data were analyzed using Exploratory Factor Analysis. Musharakah is found to be a viable alternative financing mode for SMEs. Its three main features, namely (i) risks sharing (ii) profit and loss sharing and (iii) participation have immense potential of salvaging SMEs from their debt based challenges of access to financing: collateral, high interest rate and credit rationing. The study area is limited to the samples in Klang Valley and Selangor, Malaysia. This study contributes towards a better understanding of the potential of Musharakah as a viable financing for SMEs. Hence, it provides foundation and direction in structuring Musharakah as an alternative financing

mode for SMEs. Keywords: SMEs, Debt Financing, Justice, Musharakah and Factor Analysis

In a scheme of revamping banking system in Pakistan and to bring it into consonance among with Islamic Sharia, the State Bank of Pakistan, in early 1984 introduced Twelve Modes of Financing and among them financing on the basis of Markup had commonly been practiced. The critiques were of the view that it was merely simplification of the accounting procedure and the concept of money borrowing was disguised in buying of goods on credit. For the time being its use could be allowed to abstain from apparent interest based transaction but this should have been improved with the passage of time. But it could not attract the attention of the people at helm of affairs because of either a mala fide intention or lack of knowledge, skill and even since rityon the part of people who could contribute under the official umbrella state authority. Theorists and jurists agreed with fact that this mode was also based on stratagem and pretexts. In this paper various aspects of Markup based financing had been discussed and Trader's Credit Cheque had been suggested as an alternative to the mode of Markup Based Financing.

Key words: Riba /Interest, Mark Up, Opinion of Scholars, Trader's Credit Cheque

Connections between politicians and business houses are not uncommon. Literature shows that firms tends to connect with politicians/political parties to get easy access to credit, to have lax regulatory oversight, to have preferential treatment for the government contracts and for having access to insider information. On the other hand a Shari'ah compliant firm is considered to perform ethically and justly due to adherence to the rules and regulations prescribed by Shari'ah. In recent years the research on political connections of Malaysian listed firms is increased. But the comparison of politically connected listed firms and Shari'ah compliant listed firms in Malaysia is lacking. Malaysia is a leading country in Islamic finance hence; this paper analyzes the impact of political connections and Shari'ah compliance on the profitability of the listed firms' in Malaysia for the period of 2000-2014. The paper used regression technique for the analysis. The result of the study shows that Shari'ah compliant firms perform better than the politically connected firms. Shari'ah compliance has positive and significant impact on the profitability of the firm whereas political connections have negative and significant impact on the profitability of the firm in the case of Malaysia.

Key Words: Shari'ah, Political Connections, Performance, Malaysia

Islam is a practical way of life for humanity with its own systems in every aspect of life whether cultural, social, political or economic. In the economic sphere, Muslim societies around the globe have inherited mostly interest-based feudal, capitalist or socialist economic systems. As there is no working model, Muslim economists and scholars have made considerable efforts to develop their own Shari'ah-compliant economic model and financial institutions. Since 1960's, the Islamic finance industry has grown exponentially to surpass the USD 2.1 tln mark end 2014. The Islamic banking and Sukuk sectors dominate the Islamic finance industry (approximately 80% and 15% respectively) while Islamic microfinance has less than 1% market share. Islamic financial institutions are often criticized for operating or mimicking the capitalist mode for offering nothing more than a modified conventional loan. It is also questioned whether Islamic financial institutions have indeed contributed to achieve the objectives of Islamic economics alongside a healthy and growth-oriented economy where the necessities of life and spiritual peace are available to society at large. The purpose of this paper is to propose an inclusive financial institution model (Islamic Credit Union), based on cooperative and Islamic financial principles, which is a community-based institution. Such a model has so far received only sporadic attention in the market. The paper also presents the status of Islamic Credit Unions worldwide and discusses the legal and operational framework and opportunities of the Islamic Credit Union model.

Key words: Islamic Credit Union, Inclusive Model, Financial Needs, Legal and Operational Framework

The establishment of Islamic finance education programs is occuring haphazardly around the world but mostly in non-Muslim countries such as the UK. Universities around the globe are joining the race to capture a piece of the action by offering degree programs that prepare students in the field of Islamic finance. The most prominent Islamic finance programs are currently in the UK and Malaysia; however other parts of the world are also jumping on the bandwagon. It is universally accepted that developing the Islamic finance educational infrastructure is critical for the growth of the Islamic finance industry. Courses or degrees in Islamic finance are currently being offered by over 533 institutions worldwide. This figure shows the magnitude of the task ahead in terms of regulating the accreditation of the Islamic finance education sector. There are some who believe that Islamic finance education needs an overhaul for many reasons which include the lack of a body that sets standards or a central accreditation organization, the divergence of Shari’ah interpretation among scholars, and the shortage of qualified instructors many of whom come from conventional finance or have been educated in western economics without much depth in Islamic knowledge. Another criticism is that Islamic finance education is very expensive and it is not common to have scholarships, or graduate assistantships. This paper aims to examine the current situation in the Islamic finance university education sector with an emphasis on a change in curriculum design, accreditation, as well as better marketing strategies in order to resolve the current issues of the shortage of qualified human capital.

Key words Islamic Finance Education, Islamic Finance Human Capital Deficiency, Brand Building, Islamic Marketing, Curriculum Design, Accreditation