FINAL ASSESSMENT

SEMESTER 2, 2019/2020 SESSION

KULLIYYAH OF ECONOMICS AND MANAGEMENT SCIENCES

Programme : Level of Study : 1

Course Code : ECON 3430 Section(s) :1
Course Title : Islamic Banking and Finance

Date/Time : 4-5 August 2020; 7.00am (Tuesday)- 10am (Wednesday)

Platform : WhatsApp, Gmail

Submission Date and Time : 5 August 2020, before 10am

Submission Platforms : Gmail (asmy@iium.edu.my)

(This Paper Consists of 5 Printed Pages)

INSTRUCTION (S) TO CANDIDATES

1. This Final Assessment consists of two parts; Part A- Essay (20 Marks) and Part
B- Case Study (20 Marks). You are required to answer ALL questions.
2. Please do not wait until the last minute to submit your answers. No answers will
be accepted after 10am, 5th August 2020.

ANY FORM OF CHEATING OR ATTEMPT TO CHEAT IS A SERIOUS OFFENCE

WHICH MAY LEAD TO DISMISSAL

APPROVED BY:
SECTION A: ANSWER ALL QUESTIONS

QUESTION 1

(a) On September 25th 2015, countries adopted a set of goals to end poverty, protect the
planet and ensure prosperity for all as part of a new sustainable development agenda. This is
known as Sustainable Development Goals (SDGs). SDGs consist of 17 Goals. One of Goals is
Goal 13, where countries are urged to take action to combat climate change and its impacts.

(i) Based on the above information, illustrate graphically and explain how the contract of
Istisna’ can be used to finance this goal (Goal 13). Please provide an example.

(4 marks)

(ii) Briefly explain TWO issues associated with Istisna’ contract.

(3 marks)

(b) Briefly explain TWO positive impacts of Fintech (financial technology) on the activities of
Islamic banking and finance industry

(3 marks)
QUESTION 2

Please read the articles and respond to the following questions:

 Azmat, S., Skully, M., & Brown, K. (2015). Can Islamic banking ever become
Islamic? Pacific-Basin Finance Journal, 34, 253-272.

 Khan, F. (2010). How ‘Islamic’ is Islamic banking? Journal of Economic Behavior &

Organization, 76(3), 805-820.

1. What are the similarities and differences in both articles in terms of their arguments?
(3 marks)

2. Which article (choose ONE only) do you think makes more sense to you and why?
(4 marks)

3. How do you think that these articles would help to improve the operationalisation of
Islamic banking and finance industry?
(3 marks)
SECTION B: ANSWER ALL QUESTIONS

QUESTION 3- CASE STUDY

Options for financing pandemic preparedness

By Patrick L Osewe

The health, economic and social impacts of disease outbreaks are persistent and manifold.
Lessons learnt from the 2013–2016 Ebola virus disease outbreak in West Africa demonstrate
how far-reaching the cost of pandemics can be. Beyond the devastating death toll of 11 310,
Guinea, Liberia and Sierra Leone lost 2.2 billion United States dollars (US$) in gross domestic
product (GDP). This economic loss threatened macroeconomic stability, food security, human
capital development and private sector growth across the region. Various studies have assessed
the systemic failures in the Ebola response, revealing that only about one third of countries in the
world can prevent, detect and respond to public health emergencies. These studies have also
shown, among other issues: (i) inadequate financing for pandemic preparedness; (ii) rigid
instruments for emergency response; and (iii) slow and costly delivery of aid. To support
countries and to better understand their capacity gaps in pandemic preparedness and response, in
2016 the World Health Organization (WHO) established the joint external evaluation, a
voluntary and collaborative process to assess a country’s capacity under the International Health
Regulations (2005) to prevent, detect and rapidly respond to public health threats. However, this
evaluation process does not fully address the financing for pandemic preparedness and response.
Even though the World Bank mobilized US$ 1.62 billion to support the countries hardest hit by
the Ebola outbreak, these efforts were constrained by the lack of flexible instruments for
channeling emergency resources in a timely fashion. To address this challenge, the World Bank
Group is providing a variety of financing options to support pandemic preparedness and
response. The World Bank is supporting countries through corporate-level prioritization of
pandemic preparedness and response. The International Development Association of the World
Bank Group provides loans on soft terms and grants to the 77 poorest countries in the world. The
association is replenished every three years.7 For the period that began in July 2017, the World
Bank has committed to support at least 25 countries to develop multi-sectoral pandemic
preparedness plans and to develop or strengthen multi-sectoral governance mechanisms to
coordinate implementation of national pandemic preparedness plans. The World Bank is also
engaging in strategic partnerships, for instance through its partnership with the governments of
Australia and Japan, to support 13 countries across sub-Saharan Africa, Asia and the Caribbean
to develop preparedness plans and coordination mechanisms. The World Bank has also set up a
Pandemic Emergency Financing Facility. In June 2017, the World Bank launched this facility to
offer surge funding in the form of grants and insurance pay-outs, allowing funds to reach
countries and international responders more quickly and effectively, and in so doing, prevent
outbreaks from becoming pandemics. The World Bank is also using high level advocacy to
strengthen pandemic preparedness and response. Since 2016, the World Bank – in partnership
with the World Economic Forum and the Bill & Melinda Gates Foundation – has informed
decision-makers at the national, regional and global levels about the importance and urgency of
investing in pandemic preparedness. Two simulation exercises (October 2016 and January 2017)
have informed pandemic preparedness discussions during the Annual Meeting of Ministers of
Finance at the World Bank and chief executive officers in the private sector during the World
Economic Forum Annual Meeting in Davos.
The World Bank is also leveraging its convening role to mobilize resources for regional projects
and initiatives, such as the Regional Disease Surveillance and Enhancement Project for West
Africa and the World Bank’s collaboration with the Australian government to implement a
regional technical assistance programme to ensure sustainability of health security in east Asia.
In addition, the World Bank’s International Working Group on Financing Preparedness proposes
ways in which national governments and development partners can collaborate to finance
investments that will strengthen country preparedness and response capacities for health
emergencies. In February 2018, the World Bank in partnership with WHO, the Africa Centres
for Disease Control and Prevention and the Bill & Melinda Gates Foundation will host a regional
event to define the core elements of a multi-sectoral pandemic preparedness plan, including
planning and coordination mechanisms. In addition, during the Prince Mahidol Award
Conference to be held in January 2018 in Bangkok, the World Bank will host a series of
meetings to share lessons learnt from country implementation, as well as models for financing
pandemic preparedness. To ensure the success of pandemic financing preparedness, countries
should engage in dialogue on the importance of investing in such preparedness. The World
Bank’s early successes need to continue through partnerships to renew and sustain national,
regional and global commitment and investments for pandemic preparedness and response.

References
Available at: http://www.who.int/bulletin/volumes/ 95/12/17-199695

Based on the article above, please respond to the following questions:

1. What is the major issue that has been raised in this article above?
(2 marks)

2. In your opinion, why do you think that financing pandemic preparedness is important for
many countries?
(3 marks)

3. How Islamic banking instruments (product) or Islamic social finance instruments can be
utilized to financing pandemic preparedness. Please illustrate using a diagram and explain
clearly its process and mechanisms. You can choose any relevant product (one product or
combination) to address above issue.
(10 marks)
4. Based on what you have proposed in (no. 3), discuss TWO issues that might appear in its
implementation and operationalization.
(5 marks)