The beginnings of modern Islamic finance date back to the 1970s when some financial institutions in Egypt and the Middle East started to offer interest-free financial services in order to comply with the rules laid down in the Sharia. Services, however, were not yet totally Sharia-compliant. Besides a lack of the necessary infrastructure and trained staff, a commonly accepted definition of what constitutes Sharia-compliance was missing. Even today, opinions differ widely if certain presumably Sharia-compliant financial products really deserve the branding. Nevertheless, a wide array of Islamic financial products ranging from home financing to insurance are nowadays available. Though the industry is currently managing Sharia-compliant assets of USD 895 billion, Islamic finance certainly must still be considered as niche market. However, globalization in general and the flow of funds into Muslim oil producing countries in particular could further strengthen the position of Islamic financial products. In comparison, the concept of joining forces to finance ships dates back to the 16th century. Only few could afford to individually provide all the funds needed to finance an entire vessel. Although financing schemes in the shipping industry have become more sophisticated over the centuries, the basic strategy to put the financial risks on many shoulders has prevailed until today.
As this work will point out, sharing risks and rewards along with a strong emphasis on asset-backed financing are the key features of both, Islamic and shipping finance. Therefore, using Islamic financing techniques to fund vessels, at least at first glance, does not seem to be far-fetched. Indeed, a few presumably Sharia-compliant ship financing schemes have been implemented in the past. To my knowledge, however, no scientific research about the expedience of linking Islamic finance to funding ships has been provided yet. Thus, this work aims at analyzing the feasibility of connecting these two fields with each other.
Inhaltsverzeichnis (Table of Contents)
- Introduction
- Does the German Shipping Industry Need Islamic Finance?
- The Principles of Islamic Finance
- Sources and Interpretations of Sharia Law
- Islamic Commercial Law
- Basic Principles
- Islamic Contracts
- The Underlying Asset Rule
- Forbidden Assets
- The Prohibition of Riba, Gharar and Maysir
- Summarizing Islamic Commercial Law
- Islamic Financing Modes at a Glance
- Credit-based Modes
- Equity-based Modes
- Islamic Leasing
- Forward Transactions
- Ship Financing and the Industry around It
- An Overview of the Shipping Industry
- Distinctive Features of Ship Financing
- Shipping Company Structures
- Investment Environment
- Risk Environment
- Summarizing Distinctive Features of Ship Financing
- Current Ship Financing Modes
- Modes at a Glance
- The Prevalent System in Germany: KG-Funds
- Leasing: A new Trend in Ship Financing
- The Construction of Sharia-compliant Schemes for Ship Financing in Germany
- Some Common Ground between Ship Financing and the Sharia
- Existing Sharia-compliant Offers in Ship Financing
- Possible Sharia-compliant Ship Financing Schemes
- Making the German KG-System Sharia-compliant
- Countervailing Shipping Cycles with the Help of Islamic Leasing
- General Impediments for Sharia-compliant Ship Financing
Zielsetzung und Themenschwerpunkte (Objectives and Key Themes)
The master thesis aims to explore the possibility of using Islamic finance principles in ship financing within the German context. The work examines the core principles of Islamic finance and assesses their applicability to the specific characteristics of the German shipping industry. Key themes explored in the thesis include:- The principles of Islamic finance and their application in shipping finance.
- The characteristics of the German shipping industry, particularly the structure of ship financing.
- The potential and challenges of implementing Sharia-compliant financing models in the German context.
- An analysis of existing Sharia-compliant offers and the potential for developing new models.
Zusammenfassung der Kapitel (Chapter Summaries)
The first chapter introduces the topic and provides background information on the German shipping industry and the potential for Islamic finance. Chapter two dives into the fundamentals of Islamic finance, outlining its core principles and examining its legal framework. This includes discussions on Islamic commercial law, prohibited assets, and Islamic financing modes like leasing and forward transactions. Chapter three offers a detailed analysis of the ship financing industry, providing an overview of shipping company structures, investment environments, and risk profiles. It also examines current financing modes, highlighting the prominent use of KG-funds and the growing trend of leasing. Chapter four explores the potential of creating Sharia-compliant financing schemes for German ships. It assesses commonalities between ship financing and Islamic principles, examines existing Sharia-compliant offerings, and proposes specific models based on KG-systems and Islamic leasing. The chapter concludes with a discussion of potential impediments to implementing Sharia-compliant finance in Germany.Schlüsselwörter (Keywords)
The master thesis focuses on the intersection of Islamic finance and ship financing in Germany. Key terms and concepts explored include Islamic finance principles, Sharia-compliant financing models, German shipping industry, KG-funds, ship leasing, and the application of Islamic commercial law in a Western context. This research examines the potential for using Islamic finance instruments to diversify financing options for the German shipping industry.- Quote paper
- M.A. Gregor Sahler (Author), 2011, Ship Financing in Germany: A possible Area of Application for Islamic Finance?, Munich, GRIN Verlag, https://www.grin.com/document/178589
