The films “Saved Essay Example for Free

The films â€Å"Saved Essay Much ado has been said about religion and how diverse religious practices have been depicted in numerous films. Religion in America reflects no more than simple faith but dwells into the social structure and the meanings of faith in the midst of American culture and society. With film as medium of conveying messages, it is of no shallow signification why this form of art is to be examined in the light of religious portrayal in a number of Hollywood films. This essay shall review the films â€Å"Saved! † (2004), â€Å"Witness†(__), â€Å"The Apostle† (1997), â€Å"Scarlet Letter†(___) and â€Å"Smoke Signals† (1998) in terms of their accuracy and overall attitude towards religious persons and issues. Popular not merely for their cinematic value or production or array of big stars, these movies became controversial for varied social reactions, whether for laudable reason or hyper-critical conviction. â€Å"Witness†: The Struggle for Personal Convictions â€Å"Witness† tells of a modern-day police officer (John Book portrayed by Harrison Ford) who found refuge in the laid back and primitive Amish village in Lancaster County. Wanting to protect a young Amish boy (Samuel, played by Lucas Haas) who witnessed the killing of an undercover policeman in a subway station from the perpetrators, he finds himself immersing in the Amish way of life. He dresses â€Å"plainly†, milks cows, does carpentry, takes the horse-driven buggy, and later falls in love with the child’s mother (Rachel Lapp portrayed by Kelly McGillis). Later he finds out that the killing was brought about by the higher-ups in his department, he was chased and found. Finally, the movie ends with a resolution of the case. The movie was an insight into the remote Amish community focusing on human nature and how it relates to religion. A viewer may see the film on a cultural perspective with the struggle between the Amish-English identity and the multi-cultural facets and differences between the two worlds, with religion and love story only as undertones. However, a closer look would reveal that that so much of religious beliefs and subjects are embedded in the story. The movie opens with a funeral, emphasizing the Amish funeral rites. A person who has not seen the movie nor has any idea of what the movie was about would mistake the movie for a sixteenth century epic. Only later in the subway station scene would the viewer have an idea that the story was set in the 20th century. The juxtaposed modern-dressed passengers to that of the Amish mother and son emphasized the remoteness of the two cultures’ civilization, the Amish seemingly locked in a time space that was the 16th century. The Amish culture and religious practices were clearly identified in the film. Their struggle for â€Å"plainness†, of simple living was progressed in the story. There was the men’s usual trousers and coat with hooks and eyes rather than buttons, the bearded men with shaved upper lips, women dressing the same way with religious caps-these were how the typical Amish looked like. The Amish dressed the same way, believing that dressing the way they do maintains their plainness, the Amish’ guiding principle in their way of life. As the movie progresses, images of horse-driven chariots, the farming activities, the Pennsylvanian German language, the typical Amish houses made of wood with no electricity and television, the barnyards and the corn stocks, the horse-driven farm machines, the water-driven water supply are made evident and persistent in the Amish community. This is how the Amish community looked like and depicted the manner they survived and subsisted while living a wayward life amongst 20th century modernity on its outskirts. The Amish lived a peaceful, contented life in a well-knit community where everyone knew each other and everyone was willing to lend a hand. The religious themes were clearly drawn as well. The gun played an important signification of the Amish-way versus that of the English. To the Amish, the gun was a symbol of immorality. Focus was had in this aspect such that when Samuel sees Book’s gun, Rachel and Eli (Samuel’s grandfather played by Jan Rubes) react in a rather hostile manner: Rachel tells Book that if he should stay he should respect the Amish ways, and Eli renders a heart-to-heart talk with Samuel telling him that â€Å"guns are for the taking of life and outsiders who contend that killing is necessary do not consider the alternatives:† and that by being violent, he â€Å"becomes one of them† referring to the killers in the subway station. Although Book respects their views, he does not necessarily succumb to it. He believed that his gun was necessary to protect himself and others against bad people. The Amish were peaceful people. They do not fall for man’s vices such as hatred and violence. In a scene where an Amish group was being bullied by a group of Englishmen, they were seen unyielding to anger and retaliation, a reaction normal to an English such as Book, an offense he would not let pass. Even jealousy (between Book and another Amish man attracted to Rachel) was not an issue. The film effectively showed the Amish people’s devotion to how they believe God wants them to live their lives. Modern life, as reflected by Book, on the other hand, portrayed loneliness, remoteness and complexity. In a man-eat-man world, Book was a reflection of a typical culture way beyond the Amish ideology. In one frame, one killer policeman was seen washing his hands after killing his victim in the subway bathroom. Relevant to Catholic religion, the washing of the hand signified an attempt to cleanse oneself of sins. This was an irony in the film.

A Unique and Meaningful Life Essay -- Philosophy Essays

A Unique and Meaningful Life A unique and meaningful life is compatible with the concept of a moral agent’s deliberative frame. In defense of this assertion, I will argue in favour of Barbara Herman’s Kantian discussion of moral obligation, which suggests that moral conflict occurs in the agent’s grounds of obligation. Grounds of obligation are facts recognized and considered by the agent during moral deliberation; they are â€Å"facts of a certain sort. They have moral significance because they are defining features of our (human) rational natures that limit what we can rationally will (as defined by the CI procedure)† (318).[1] The grounds are not reasons for acting but are guides for deliberation; the facts considered in a given situation are founded in one’s deliberative frame, namely matters of importance to the moral agent.[2] Similar to Herman’s defense of Kant, I will argue that moral conflict may occur among the grounds of obligation in the agentâ₠¬â„¢s deliberative frame, but never in one’s duty because the CI will always determine only one moral obligation. I will then anticipate two criticisms to counter Herman’s defense of Kant. The first criticism proposes that the individual field of deliberation - that contains â€Å"not only [the agent’s] interest and private projects but also the interests of others as possible sources of claims on [the agent’s] actions and resources† (331) - can lead to conflicting assumptions about duties in the members of society as a whole. And the second criticism arises from Herman’s rejection of the feeling of guilt in the Kantian model, in situations of moral conflict.[3] The critics I present accept that the moral agent has a life of her own following from the concept... ... 1990. Notes: [1] Throughout my paper, I will be using â€Å"CI† as short form for Kant’s Categorical Imperative [2] I will be using both female and male subjects when referring to the moral agent [3] A â€Å"field of deliberation† is another way of defining the â€Å"deliberative frame† (as described above); both contain grounds of obligation when referring to the considerations taken by the moral agent during her deliberation [4] Basically there are only two options since given the opportunity, she must save one. [5] Restitution and Remainder are terms that need not be defined since my anticipated critics will focus on the notion of guilt. [6] It may seem that the feeling of guilt is irrelevant to the discussion of an agent’s deliberative frame; however, the second critic hopes that finding a flaw in Herman’s argument will lead to a rejection of the concept. A Unique and Meaningful Life Essay -- Philosophy Essays A Unique and Meaningful Life A unique and meaningful life is compatible with the concept of a moral agent’s deliberative frame. In defense of this assertion, I will argue in favour of Barbara Herman’s Kantian discussion of moral obligation, which suggests that moral conflict occurs in the agent’s grounds of obligation. Grounds of obligation are facts recognized and considered by the agent during moral deliberation; they are â€Å"facts of a certain sort. They have moral significance because they are defining features of our (human) rational natures that limit what we can rationally will (as defined by the CI procedure)† (318).[1] The grounds are not reasons for acting but are guides for deliberation; the facts considered in a given situation are founded in one’s deliberative frame, namely matters of importance to the moral agent.[2] Similar to Herman’s defense of Kant, I will argue that moral conflict may occur among the grounds of obligation in the agentâ₠¬â„¢s deliberative frame, but never in one’s duty because the CI will always determine only one moral obligation. I will then anticipate two criticisms to counter Herman’s defense of Kant. The first criticism proposes that the individual field of deliberation - that contains â€Å"not only [the agent’s] interest and private projects but also the interests of others as possible sources of claims on [the agent’s] actions and resources† (331) - can lead to conflicting assumptions about duties in the members of society as a whole. And the second criticism arises from Herman’s rejection of the feeling of guilt in the Kantian model, in situations of moral conflict.[3] The critics I present accept that the moral agent has a life of her own following from the concept... ... 1990. Notes: [1] Throughout my paper, I will be using â€Å"CI† as short form for Kant’s Categorical Imperative [2] I will be using both female and male subjects when referring to the moral agent [3] A â€Å"field of deliberation† is another way of defining the â€Å"deliberative frame† (as described above); both contain grounds of obligation when referring to the considerations taken by the moral agent during her deliberation [4] Basically there are only two options since given the opportunity, she must save one. [5] Restitution and Remainder are terms that need not be defined since my anticipated critics will focus on the notion of guilt. [6] It may seem that the feeling of guilt is irrelevant to the discussion of an agent’s deliberative frame; however, the second critic hopes that finding a flaw in Herman’s argument will lead to a rejection of the concept.

Describe the character of Macbeth in detail Essay

Describe the character of Macbeth in detail, showing clearly in what way his character changes as a result of the action of the play. Consider carefully why you feel Macbeth is a tragic hero and whether you feel any sympathy for him. NOTES: * Beginning – honest; noble; valiant; brave; loyal * End – â€Å"butcher†; not honest, loyal; still brave and prepared to fight till his death – â€Å"at least we’ll die with harness on our back†; he has become cruel and hardened – â€Å"I have almost forgotten the taste of fear†. He is corrupted by power and greed * So What Changes Him? : o Witches give him idea o Wife encourages him/builds on idea o Ambition/determination to be king o Once he starts killing, he can’t stop * Macbeth kills Macduff’s family – turning point for L. Macbeth – she realises what she has turned her husband into. * He can no longer control his ambition and it takes control over his actions * In the very first scene when we meet the witches, we see that Macbeth is closely connected to them, because they are talking about him, saying they will meet him and talk to him – â€Å"there to meet with Macbeth†. However, this is strongly contrasted in the next scene when we hear Duncan talking favourably about Macbeth, saying that he fought bravely and is to be rewarded for his loyalty – â€Å"oh valiant cousin, worthy gentleman†, â€Å"they smack of honour both† * Although it may seem from the start that Macbeth is weaker than his wife, this is not always the case – she never actually kills anyone: she gets Macbeth to kill Duncan because she thinks Duncan looks like her father when he sleeps – â€Å"had he not resembled my father as he slept, I had done’t†. * â€Å"Glamis and Thane of Cawdor: the greatest is behind.† – Here we see Macbeth’s own ambition before his wife has intervened. Also, before he talks to his wife, he considers the witches and if they are telling him the truth or if they are just evil, and he also thinks about ways he could fulfil their prophecy, the murderer of Duncan being one of them – â€Å"my thought, whose murder is yet but fantastical.† * Dramatic irony – just as Duncan and Malcolm are talking about deceit and saying how â€Å"there’s no art to find the mind’s construction in the face†, Macbeth enters. We know he is already deceiving people. * He starts to become evil when, in act 1 scene 4, he thinks about killing Malcolm. Here he starts to rhyme as well, like the witches, – a sign of him changing – â€Å"stars hide your fires†¦when it is done to see† * When Macbeth and his wife are discussing Duncan’s murder, Macbeth is unsure about it – â€Å"we will speak further† – but his wife keeps encouraging him. â€Å"Macbeth† by William Shakespeare is a play about deceit, ambition and betrayal, in which some of the characters change dramatically because of the fast-moving action of the play. One of these characters is the play’s tragic hero, Macbeth himself. Macbeth as we see him at the end of the play is barely recognisable as the same man we meet at the beginning: he has turned from a loyal, noble man to a cruel and hardened â€Å"butcher†, driven mostly by his own ambition to become King. Because Macbeth is a true tragic hero and we can clearly see all his good qualities as well as his bad ones, we do feel some sympathy for him as well. This play is set in Scotland, where Macbeth is a gallant Thane who is recognised and rewarded by King Duncan for his heroic efforts in battle. However, Macbeth is given the idea by three witches that someday he himself will be King and, especially after speaking to his wife on the matter, he becomes determined to fulfil the witches’ prophecy and claim the throne of Scotland. Although, this is not easy and Macbeth resorts to murder and begins to kill anyone who might pose a threat to him, and this eventually leads to his own death. From the very first scene, we see that Macbeth is somehow connected to the supernatural as the three witches speak of meeting Macbeth and talking with him – â€Å"there to meet with Macbeth†. However, this is contrasted is the next scene when we hear Duncan speaking favourably of Macbeth, saying that he fought bravely and is to be rewarded for his loyalty – â€Å"o valiant cousin, worthy gentleman†, â€Å"they smack of honour both† (Macbeth and Banquo). Therefore, before we have even met Macbeth ourselves, we have a mixed opinion of him; is he a valiant and â€Å"worthy gentleman† or does he have a darker side to him as the witches suggest? The answer to this question is that he has both qualities, but they each arise separately. During the course of the play, we see Macbeth quickly changing from a â€Å"gentleman† to a â€Å"butcher†. The first time we meet Macbeth is with the witches, and his first words â€Å"so foul and fair a day† echo the witches’ in the first act – â€Å"fair is foul and foul is fair†. This gives the immediate impression that he is closely connected to them, and in his first soliloquy he is giving second thoughts to what the witches said about his future and he is clearly ambitious from the start – â€Å"Glamis, and Thane of Cawdor: the greatest is behind†. Although Macbeth is thinking about the witches’ words and already considering the possibility of murdering Duncan, he makes it clear he would never actually do it – â€Å"my thought, whose murder is yet but fantastical†. In the next scene, Duncan and Malcolm talk about deceit and they say that â€Å"there is no art to find the mind’s construction in the face†, when, ironically, Macbeth walks in: he is hiding his thoughts about the witches and we know he will be deceitful when he murders Duncan – â€Å"stars hide your fires, let not light see my black and deep desires†. Again, when talking to Lady Macbeth, he is still unsure of the idea. She is trying to persuade him that Duncan’s death would be best but he still says â€Å"we will speak further† and he is worried about someone finding out what he will have done – â€Å"if we should fail†, and it is easy to see that Macbeth is a good and moral person. In Macbeth’s first major soliloquy he weighs up both sides of the argument, thinking about how much Duncan trusts him and thinks he is a good man – â€Å"he’s here in double trust†. Macbeth knows that Duncan is also a good man, and a wonderful king, and it would not be right to kill the king simply because of his own greed, but his ambition to be king leads him on. Macbeth knows that people have â€Å"golden opinions† of him, and he likes being looked upon in such a way, and he does not really want to loose that; he knows that he will if he carries out this murder, and these opinions would be â€Å"cast aside so soon†. However, Macbeth is now determined, although not as much as his wife, to become the King of Scotland and he says that the only thing leading him on is his ambition – â€Å"I have no spur†¦but only vaulting ambition†. Just before, and after, Macbeth murders Duncan, he is at his weakest and feels very culpable. His imagination begins to play on him. In the moments leading up to the murder, his thoughts are filled with evil; he imagines seeing a dagger covered in blood – â€Å"is this a dagger I see before me†¦or art thou but a dagger of the mind, a false creation?†, and he imagines actually killing Duncan – â€Å"I see†¦gouts of blood†. He thinks that â€Å"nature seems dead† and he thinks of wolfs, ghosts, and witches – all symbols of evil. Once Macbeth has murdered Duncan, he still imagines things: he claims to hear voices telling him that he will never sleep again – â€Å"sleep no more: Macbeth does murder sleep† and he cannot wash the blood stains off his hands – â€Å"will all great Neptune’s ocean wash this blood clean from my hand? No†, to which his wife replies, â€Å"a little water clears us of this deed† (only to prove herself wrong later). When Duncan is discovered dead by Macduff, Macbeth acts surprised and angry – â€Å"the wine of life is drawn†, â€Å"th’expedition of my violent love outran the pauser, reason†. However, this may not be just an act: Macbeth could really be feeling that way, and he is angry with himself for what he has done when he sees other people’s reactions. Hence, Macbeth travels to Scone and is crowned King of Scotland. Even though Macbeth has achieved what he wanted – to be king – he does not stop killing. He fears Banquo knows that he killed Duncan, so Macbeth is now suspicious of Banquo, as Banquo is of him – â€Å"there is none but he, whose being I do fear† Therefore, the only option Macbeth sees is to kill Banquo, so he arranges for three men to murder Banquo and his son, Fleance, on the night of a banquet. He tells them that he cannot murder Banquo himself because the risk of being found out is too great – â€Å"certain friends that are both his and mine†¦wail his fall†. This is the point at which we see a major change in Macbeth’s character: he is still nervous and slightly afraid, but is now a little more confident; and he organised the murder by his own free will and without any help – he did not need his wife to set it up or to assist him, whereas et the murder of Duncan it was she who organised everything. Lady Macbeth did not even have any knowledge of Banquo’s murder before it took place and she asks Macbeth â€Å"what is to be done?† and Macbeth tells her to â€Å"be innocent of the knowledge†¦till thou applaud the deed†. Macbeth is pleased to hear of Banquo’s death, but the news of Fleance’s escape troubles him – â€Å"then comes my fit again†¦I am cabined, cribbed, confined†. We can see that Macbeth does still have a conscience when he is at the banquet, as he sees the ghost of Banquo in the hall – â€Å"the graced person of Banquo preset† and he talks to it – â€Å"thou canst not say I did it; never shake thy gory locks at me†; so it is clear that Macbeth still has remorse for what he has done and he cannot hide it, despite his wife telling him to â€Å"look like th’innocent flower, but be the serpent under’t† and he said himself that â€Å"the false face must hide what the false heart doth know†. Macbeth speaks to his wife alone after the banquet, and he says that he will visit the witches again and from now on he will kill anyone who might get in the way of him keeping the throne – â€Å"we are yet but young in the deed†, so we can see Macbeth changing again, this time becoming more confident. This is the last time that he and his wife see each other. Macbeth goes to see the three witches again and his confidence is boosted even more. The witches plan, and succeed, to make Macbeth over-confident and this will be his down fall. They show him three apparitions, each telling him something; the first is an armed head (which is actually his own) and it tells him to â€Å"beware Macduff†, the second is a child covered in blood (Macduff) who tells him â€Å"no man born of a woman shall harm Macbeth†, and the third, a crowned child with a tree in its hand (Malcolm) tells him that â€Å"Macbeth shall never be vanquished until Great Birnam Wood† moves to Dunsinane hill. Finally, a procession of eight kings passes with Banquo following behind them. These apparitions, especially the second and third, make Macbeth more confident in himself and he thinks he cannot be killed by anyone. With his newfound confidence he vows to continue killing, as he cannot be stopped – â€Å"the very firstlings of my heart shall be the firstlings of my hand†, and with the knowledge of Macduff travelling to England, Macbeth turns to murdering every other member of Macduff’s family – â€Å"give to the edge o’th’sword his wife, his babes, and all unfortunate souls†. As Lady Macbeth grows weaker, Macbeth grows stronger. Lady Macbeth is now the one feeling guilty, and she begins sleepwalking and hearing â€Å"foul whisp’rings†, just as Macbeth was before. Macbeth heads into battle against the English army, knowing that his â€Å"way of life is fall’n into the sere†. He has now become hardened and does not care for much, except his wife; when the doctor brings him news of Lady Macbeth’s illness, Macbeth asks him to make her better – â€Å"cure her of that†¦perilous stuff which weighs upon the heart†, so we can clearly see that he still loves her and cares about her, and has not yet completely lost everything that was good about him. Despite this, Macbeth is now a more cruel and, in a way, evil man and he says he has â€Å"almost forgot the taste of fears†, and he is not surprised to hear of his wife’s death – â€Å"she would have died hereafter†. He thinks about life and how it is a â€Å"brief candle† and now his life has lost it’s meaning, so he might as well die fighting – â€Å"life’s but a walking shadow, a poor player†¦then is heard no more†¦signifying nothing†. Macbeth knows he is going to die when he hears that Birnam wood is moving toward Dunsinane but still he is brave – â€Å"bear-like I must fight the course†. Macbeth meets with Macduff outside the castle, where he learns that Macduff was not born of a woman and he can kill him. Now Macbeth knows for sure that he will die there and then and he could have just let Macduff kill him, but he decided to fight bravely till his death – â€Å"at least we’ll die with harness on our back†. Macbeth is truly a tragic hero as he had many of the qualities needed to be king – he was a good man: noble, brave, loyal, caring and loving toward his wife, and he never lost the will to fight bravely, no matter what the outcome may be. However, he changed in a very short space of time to become cruel and hardened, influenced, first by the witches, then by his wife. Because of this, we do feel sympathy for him; because he was good man who was changed by supernatural beings, but also partly by his own ambition. This is a tragic tale of how ambition can tarnish a person and make their life seem pointless, or as Macbeth said â€Å"Life’s but a walking shadow, a poor player That struts and frets his hour upon the stage And then is heard no more. It is a tale Told by an idiot, full of sound and fury Signifying nothing†.

Study On Islamic Banking And Financial Stability Finance Essay - Free Essay Example

Sample details Pages: 12 Words: 3534 Downloads: 8 Date added: 2017/06/26 Category Finance Essay Type Research paper Did you like this example? When examining the Islamic bank soundness relatively to conventional banks, it is imperative to provide to the reader an accurate description of the Islamic banking system. For that reason, the present chapter is dedicated to present the basic characteristics of the Islamic banking system that make it different from the traditional one. Hence, the chapter will be divided into two sections; the first one deals with a presentation of the Islamic banking system. It highlights its fundamental aspects: origin, basic assumptions and theoretical framework. Moreover, it provides a brief explanation of the common Islamic banking products. In the second section, I am concerned to emphasize the importance of ensuring banking stability. Furthermore, I give an overview of the literature focusing on the role of Islamic banks in maintaining financial stability. Section I.1: An Overview on Islamic Banking Islamic banking operates in accordance with Islamic law called Shariah. The principle sources of these rules are the Quran and the recorded sayings and actions of the prophet Mohammed (Peace Be Upon Him) followed by the consensus (Ijmaa) and the analogy (Qias). Islamic banking is characterized by several fundamental aspects. They consist mainly of the prohibition of interest and gambling and the incorporation of the risk sharing principle. Then, Islamic financial transactions should be linked with real economic transactions. Further, Islamic financing and investments are limited to the lawful activities. Finally, Islamic banking transactions seem to be inspired from the ethical and moral values. (Hassan and Lewis, 2007; Visser, 2009) Islamic bankers need to understand these principles in order to provide Shariah compliant products and services. Hence, Islamic banks must employ a Shariah Board to verify their compliance with Islamic transaction rules. In what follows, we will explain the key features of Islamic banking and describe the basic Shariah compliant contracts. I.1.1 Islamic Banking Principles The prohibition of Riba (interest and usury): According to the Islamic religious scholars, there are two types of riba cited in the Quran and in the traditions of prophet Muhammed (PBUH) riba alfadl and riba alnasia. Riba alfadl refers to an excess or an increase paid in a direct exchange of commodities that follows to unequal exchange. While, riba alnasia refers to a positive, fixed and predetermined rate of return on loan, claimed by the lender as a reward for waiting (Zaher and Hassan, 2001; Visser, 2009). Many argue that riba alnasia corresponds effectively to the modern interest. The banning on riba is based on a number of verses from the Quran such as Al-Baqara (2: 274-280), Ali-Imran (3:130) and Al-Rum (30:39). To explain the rationales behind the injunction of interest, we should know that money, in the Islamic perspective, is considered as a medium of exchange and a way of defining a value of assets, properties and labor. Consequently, money has not a value on itself and it is not a commodity. Thus, considering interest as a price of money is rebutted in the Islamic economic theory. Additionally, Islamic law prohibits interest even if it is claimed as the productivity of capital. Muslim scholars deem that it isnt a valid argument to justify its rightness, since it is paid on capital and required independently of the capital productivity results. Undoubtedly, this is not in contrary to Islamic banking principles aims in investing and increasing wealth. But, Shariah rules dont allow an increase of money via a fixed rate simply by keeping it in a deposit account or lending it. In fact, wealth should not rise without taking risk or making physical or mental effort. Finally, and regarding the argument that rate of interest corresponds to the discount rate, Islamic religious scholars argue that the latter should not be predetermined. Only the future economic conditions are allowed to determine the time value of money. To sum up, Islamic laws prohibit investments in all financial projects and instruments that guaranteed a fixed and predetermined rate of return. (Khan 1988; Pal, 1994; Zaher and Hassan, 2001) The prohibition of Gambling and Gharar: Because of the inequity, injustice, enmity and hatred between parties that could result from gambling and bets, Quran forbids such activities: Al-Baqara (2:219) and Al-Maida (5:90). The banning of gambling may be justified by the excessive risk and uncertainty of gains. But, taking risk with hope of winning is essential for human life. Besides, Islamic transaction rules allow Mudharabah  [2]  despite that involves a great risk. Consequently, assuming that injunction of gambling is related with uncertainty of gains is unacceptable. Siddiqi (2001) argues that gambling is taking risk deliberately which is not necessary in economic activity. While, Al- Suwailem (2000) suggests that the payoff structure makes the difference. He claims that Shariah principles prohibit Muslim persons to engage in a zero -sum game with uncertain payoffs. In such game, the preferences of each player are in direct opposition. So, the one partys payoff increases only if the other partys payoff decreases. There is no possibility of cooperative game (that both parties can win). Therefore, Islamic rules on transactions prohibit risk which is a channel to make one party profit at the detriment of the other (Ibn Taymiah in Al- Suwailem, 2000). The basic motive for the prohibition of gambling is the imbalance between rights and obligations of each party. This fundamental rule should be applied to the modern financial arrangements in order to see their legitimacy in the Islamic economic theory  [3]  . Profit and Loss Sharing (PLS): The interest-free banking system is based on the risk sharing principle (known also as Profit and loss Sharing). This means that the capitals owners and the entrepreneur share profi t and loss equally. In fact, capital provider can earn a return only if it accepts to bear loss when the project fails (Hassan et al, 2003). Hence, Zaher and Hassan (2001) argue that Islamic financing is similar to the equity financing. Unlike conventional banks, Islamic banks act as a partner rather than a lender. Moreover, the notion of interest rate is henceforth substituted by the profit and loss sharing ratio. As mentioned in Hasan (2008), the PLS ratio reflects the ratio by which profits or losses of a business are shared. It is usually expressed as a percentage of the total profits. According to the International Association of Islamic Banks  [4]  (1995), PLS system is adequate to establish congruence between social values and economic growth. In fact, PLS system guarantees more equitable distribution of wealth between contractual parties since the return depends on the real capital productivity. Thereby, it gives no way to the exploitative contracts. In addition, t he PLS structure eliminates conflict of interest problems. All partners contribute as expected to ensure business ventures success. Furthermore, PLS mechanism increases the volume of investments and employment relatively to the interest financing regime. The latter makes feasible and acceptable only venture whose expected return is higher than the debt cost. Hence, PLS regime makes the investment opportunities equally evaluable to entrepreneur with productive idea. Linkage with real economy: One of the major pillars of the Islamic finance theory is the integration of the financial and real sectors. In fact, all Islamic financial transactions should be associated with real economic transactions. Indeed, there is no place to debt-based assets in Islamic finance. (Mirakhor and Zaidi, 1988; Zaher and Hassan, 2001; Siddiqi, 2006) Investing in (Halal) lawful activities: Islamic banks should not invest in industries prohibited by Shariah such as: alcoholic beverage, pornography and p ork. Adequacy with ethical and moral values: Islamic finance isnt concerned only with the economic and financial aspects of the transactions. It takes into consideration social, ethical, moral and religious aspects. Financiers have to increase wealth without using ruses and involving gharar or information asymmetry. Indeed, Islamic finance takes care of fairness, equity and justice among the members of society. There is no separation between spiritual or social values and businesss aims. (Zaher and Hassan, 2001) More than prohibition of interest and gambling, Islamic transaction rules prohibit Muslims to engage in contracts that involve: fraud and deception (Ghobn), coercion (Ikrah), and exploitation of need (Bayal Mudtarr). Further, they forbid business consisting in withholding supplies of essential goods and services with an attention to raising prices (Ihtikar) or raising price by manipulating false bids (Najsh). Finally, Shariah interdicts contracts with lack of informati on about the commodity (quantity, priceÃÆ' ¢Ãƒ ¢Ã¢â‚¬Å¡Ã‚ ¬Ãƒâ€šÃ‚ ¦) that may lead to dispute among parties (Jahl  mufdi  ila  al-niza) (Siddiqi, 2001). I.1.2 Basic Islamic Banking Contracts The central role of Islamic banks is to perform financial intermediation with regard to the banking Shariah rules. Islamic banks collect funds from capital surplus agents in the form of investment and demand deposits. Then, they channel it to the capital deficit agents using interest-free financing instruments. I.1.2.1 Interest-free financing instruments To satisfy clients financing requirements, Islamic banks have developed multiple interest-free financing techniques based on two principles: Profit and Loss Sharing and Markup principles. (Zaher and Hassan 2001; Hassan et al, 2003) Under PLS principle, Islamic banks use two major instruments Mdurabah and Musharakah. Mudharabah (Trusty finance contract or principal/agent partnership): bank provides the e ntire capital needed to finance a project while the entrepreneur offers his labor, expertise and management. The profit is shared between them on a greed ratio while the financial losses are exclusively borne by the bank. The liability of the entrepreneur is limited only to his time and effort. However, if the negligence or mismanagement of the entrepreneur can be proven he may held responsible for the financial losses incurred. At the end of the period stipulated in the contract, the bank receives the principal only if the project suceed. Bank cannot request collateral to reduce credit risk but it may do it in order to decrease moral hazard problems. Mudharabah is usually employed in short term investment projects and in trade and commerce. Musharakah (Equity partnership): bank enters into an equity partnership with one or more partners to jointly finance a project. Profits and losses are shared strictly in proportion to the capital contribution. Unlike in Mudharabah contract, t he bank can exercise the voting rate and monitor the management. Musharakah is usually employed to finance long term investment projects. Under Markup principle, Islamic banks use, among others, Murabaha and Ijara transactions. Murabaha: the bank purchases a tangible asset at the request of its client. Then, it sells to it at a predetermined price that covers the original cost and an agreed profit margin. Ijara (leasing): it is similar to a conventional leasing. The bank purchases an asset and leases it to a customer. The ownership remains with the bank or it is gradually transferred to the entrepreneur in a rent and purchase scheme. According to Zaher and Hassan (2001), the rent paid cannot be considered as an interest because it is applied to tangible and durable goods and for its wear and tear. Islamic banks can make also charitable loan (Qard Hassan) which is zero- return loan. Banks are allowed to charge the borrowers a service fee to cover the related administra tive expenses. This fee must not be associated with neither the loan amount nor the maturity. I.1.2.2 Deposits accounts Islamic banks collect funds through two main categories of deposits: demand deposits and investment deposits. (Ahmed, 1993) Demand deposits (Current accounts or Amanah): deposits that yield no return and repayable on demand at par value. Banks can use demand deposits at their own risk. The profits resulting from the employment of funds accrue to the bank, unless, the total loss is borne only by the bank. Investment deposits (unrestricted Mudharabah): unlike the demand deposits, the PLS investment deposits are not considered as a liability because neither the principle nor the return are guaranteed. Depositors, in this case, are like partners but without voting right. Depositors share the banks net profit according the PLS ratio stipulated in the contract. Investment deposits cannot be withdrawn at any time but only on maturity and in the best case. T wo theoretical models of Islamic bank have been suggested based on the structure of assets and liabilities: Two-tier Mudharabah and two windows models. (Mirakhor and Zaidi, 1988; Sundararajan and Ericco, 2002; El- Hawary, 2007) Two-tier Mudharabah model: it is characterised by the full integration of banks assets and liabilities. On the liability side, bank collects funds in the form of unrestricted Mudarabah (investment deposits) and it acts as an entrepreneur / agent. Depositors and shareholders, in this case, share the overall banks profits on an agreed ratio. Bank is also permitted to accept demand deposits that yield no return but charging service fees. Depositors are aware that the bank will use their demand deposits to finance risk bearing projects On the asset side, bank enters into restricted Mudharabah with an entrepreneur as a provider of capital. Bank shares the net projects profit according to an agreed percentage only when the project wins. The two-tier Mudhar abah model does not require any specific reserve on both investment and demand deposits. Khan (1987) supposes that, contrary to investment deposits, demand deposits should require reserve because they cannot absorb the bank loss. Two windows model: It is very rare in practice. The liability side is divided into two windows: investment deposits and demand deposits. Depositors choose from the beginning the type of deposits. Bank uses only investment deposits to finance risk bearing investments. However, demands deposits are kept intact as Amanah and cannot be used. Therefore, banks must apply a 100% reserve on the demand deposits and 0% reserve on the investment deposits. Section I. 2: Islamic Banking Stability In addition to the financial intermediation function of banks, Islamic and conventional banks have to provide further services that fulfil countrys needs and respond to the globalization requirements. In particular, they offer services that facilitate national and inte rnational payment flows and currency exchange. Moreover, banks may invest and trade for their own accounts. Accordingly, the role of bank in the economy depends on the degree of the financial markets development. Albeit, in highly developed financial markets, banks are not the only institutions that provide liquidity and produce financial information necessary for intermediation. Banks remain at the heart of the economic activity because they are considered as a fulcrum for monetary policy implementation (Mirakhor and Zaidi, 1988; Lindgren et al, 1996). Consequently, macroeconomic stability requires a sound banking system. In fact, banks provide a microeconomic channel for the implementation of some monetary policies. Whereas, vulnerable banks are less responsive to market signals and may impede the monetary transmission. As a result, unstable bank constrain the policy choices and break the linkage between policy instruments and their performance in the economy (Lindgren et al, 1 996). For these reasons, banks owners and managers, banking supervisors and government should be adequately insured for banks financial soundness. Lindgren et al (1996) define bank soundness as the ability of the bank to withstand adverse events such as bank run, major policy changes, financial sector liberalization and natural disaster. So, it reflects the bank capacity to be solvent and remain so under difficult economic conditions by means of their capital and reserve accounts. In the present study, my focus is on analysing the role of Islamic banking in maintaining financial stability. More precisely, we will analyse the Islamic banks financial soundness relatively to conventional banks. I.2.1 Islamic Banks  Strengths According to Bryant (1980) and Diamond and Dybvig (1983), traditional banks are inherently unstable since they are deposit-taker institutions. In fact, under ordinary circumstances, banks do not expect that all depositors demand their money back at the same time. This depends on their individual needs of liquidity. Thereby bank can make loans over long horizons even if all depositors have the right to withdraw at any time, by keeping a small amount of cash in hand. Unless the individual expenditures needs are largely uncorrelated, depositors attempt to withdraw their money simultaneously. In such situation, bank cannot pay all the depositors quickly because of its illiquid assets (business, mortgage loans). It pays the first in line while the last one will be left with nothing  [5]  . This uncertainty about banks ability to repay immediately can lead to a bank run situation. Therefore, due to the maturity mismatch between assets and liabilities, healthy banks are potentially vulnerable to bank panics. However, many argue in line of Khan (1987) that the theoretical models of Islamic banks can successfully fill the failure of conventional banks in maintaining stability. In fact, Islamic banks should separate investment funds from the demand deposits and must apply 100% reserve on the latter. Banks can either sell currency or Government Investment Certificate. Hence, demand deposits cannot participate in the creation of money because depositors dont wish to share bank risks. They want to keep it intact in order to pay their expenditures. Therefore, maintaining 100% reserve removes the risk of bank panics and promotes the payment system efficiency. Khan (1987) has explained that Islamic banking model isnt unfamiliar with the economic literature; Simons (1948) and Friedman (1969) have already suggested a similar banking model to avoid bank run. The PLS principle plays also a critical role in keeping financial stability. As a financial intermediary institution between capital surplus and capital deficit agents, Islamic banks channel investment deposits into PLS loan (Mudharabah and Musharakah). Given that neither the principal nor the return of the investment deposits are guaranteed, any loss occu rred on the asset side is totally absorbed on the liability side. Thus, if the value of assets decreased, the value of the liabilities decreased respectively. Therefore, the PLS principle allows the bank to maintain its net worth under difficult economic situations. (Khan, 1987; Ahmed, 2002; Syed Ali, 2007; Cihak and Hesse, 2008) Finally, Ahmed (2009) argues that the prohibition of Riba and the linkage with the real economy principle could prevent the financial crises. In fact, financial assets and derivatives based on other debt financial assets cannot be traded. So, there is no place for speculative behaviour that leads to instability like what is happen in the last U.S subprime crisis. I.2.2 Islamic Banks  Weaknesses Unfortunately, Islamic banks may lose their comparative advantages against their counterparts due to the deviations of the current practices from the theoretical model. In particular, the mimicking of conventional banks may raise multiple risks that a re not assumed to be for Islamic banks. The first deviation is in the composition of balance sheet. In a typical Islamic bank, more than 80% of total assets are fixed income and short term maturity assets. While, only 20% are dedicated to long term and risk sharing investments. El- Hawary (2007) and Greuning and Iqbal (2008) claim that the dominance of less risky, low return assets deprives the bank of the benefits of the portfolio diversification, as Mudarabah and Mushrakah contracts are more profitable. Analysts explain this behaviour by the fact that sale based transactions are less associated with moral hazard and adverse selection problems than PLS investments (Siddiqi, 2006). In fact, the latter need additional effort to capture good investment opportunities and to analyse projects adequately. Besides, Islamic banks cannot request for collateral to reduce credit risk. Thus, risk sharing investments require a high level of confidence and transparency between investors, bank s and depositors. The second divergence with the Islamic banking theory is in the income distribution. In some cases, the Islamic banks distribute profits to the investment depositors even when they accrue loss, so the profits are paid out of equity. This phenomenon is the displaced commercial risk (El- Hawary, 2007; Greuning and Iqbal, 2008). Therefore, the current practices dont make a clear differentiation between shareholders and investment account holders rights. Finally, Islamic banks may not fully respect Shariah principles in their activities. Such behaviour makes them vulnerable to risks normally born by the conventional counterparts. In particular, Malaysian Islamic banks have introduced innovative products that seem to be Shariah compliant, whereas they are similar to the conventional contracts. For instance, they allow the sale of debt arising from sale-based transactions. Moreover, Chong and Liu (2009) claim that Malaysian banks are not very different from traditi onal banks in the adoption of the PLS principle. Conclusion In this chapter, I described the main distinctive features of Islamic banking and the frequently used contracts. This is in order to explain how Islamic banks can perform their financial intermediation function effectively without paying and receiving any interest. Then, I presented a literature review on the Islamic financial stability which supposes that Islamic banks could bring more stability to the international financial system. In fact, the PLS principle applied on investments deposits and the 100% reserve on demand deposits make Islamic banks less vulnerable to bank panics (khan,1987). Moreover, Ahmed (2009) claims that the banning on riba and the asset backing principle could, in some way, prevent financial crisis. Never the less, many argue that the deviations of current practices from the Islamic banking model and providing services which are not fundamentally different from conventional ones reduce the Isl amic banks capacity in taking financial stability. So, Islamic banking soundness is closely related to the well application of the Islamic transactions rules. But this is requires a joint effort by the participants (bankers, depositors, investors, shareholders, governments). To be strong, Islamic banks need robust institutional and regulatory infrastructures to support their work. For instance, they need legally recognized institutions to ensure their efficient functioning, and to monitor compliance of their services with Islamic banking principles. In the following, I will try to analyse empirically the Islamic banks soundness relatively to conventional banks using two different approaches. The first one is a non parametric analysis of the different indicators of financial soundness (chapter two). The second approach is based on an econometric model testing three hypotheses (chapter three). Don’t waste time! Our writers will create an original "Study On Islamic Banking And Financial Stability Finance Essay" essay for you Create order