Qualitative Analysis of Anions Essay

The objective of this experiment was to use qualitative analysis to determine the chemical characteristics of four known anions by systemic confirmatory testing. The chemical characteristics observed were to be used to identify an unknown sample. Sulphuric acid was to be added to a carbonate solution and an effervescent reaction would confirm the presence of carbonate anions. Another sample of carbonate solution was to be reacted with hydrochloric acid and the gaseous product was to be reacted with a suspended drop of barium carbonate. The presence of clouding in the droplet would also confirm the presence of carbonate anions. Silver nitrate was to be added to chloride solution and the formation of a white precipitate, silver chloride, would confirm the presence of chloride anions. Ammonium hydroxide would be added to dissolve part of the precipitate. The resultant supernatant solution was to be decanted and re-acidified with nitric acid to reform the precipitate and definitively confirm the presence of the chloride anion. Silver nitrate was to be added to iodide solution and the formation of a yellow precipitate, silver iodide, would confirm the presence of iodide anions. Another sample of iodide solution was to be reacted with drops of acetic acid until sufficiently acidic. Potassium nitrate was to be added to the solution causing a colour change. Methylene chloride was to be added to this sample and shaken to confirm the presence of iodide anions by forming two separate and differently coloured layers. A barium chloride-calcium chloride mixture was to be added to sulphate solution and heated to 90oC. The sample was to stand for a period of time to allow the formation of a  white precipitate, barium sulphate, confirming the presence of the sulphate anion. The addition of hydrochloric acid and subsequent heating were to have no effect on the presence, further confirming the presence of sulphate anions. MATERIALS AND METHODS EQUIPMENT CHEMICALS Test tubes Carbonate Solution, Test tube rack Concentrated Sulphuric acid, H2SO4 Eye dropper 6M Hydrochloric acid, HCL Graduated pipette Barium hydroxide solution Ba(OH)2 Pipette bulb Chloride solution, Cl- Pasteur pipette Iodide solution, I- Beaker 0.1M Silver nitrate, AgNO3 Thermometer Concentrated Ammonium hydroxide, NH4OH 6M Nitric acid, HNO3 6M Acetic acid. HC2H3O ­2 Potassium nitrate, KNO2 Methylene chloride solution, CH2Cl2 Sulphate solution, Barium chloride-Calcium chloride mixture, BaCl2-CaCl2 Unknown Sample 7 SAFETY Carbonate solution is hazardous in case of skin contact (sensitizer, irritant), of eye contact (irritant), inhalation (lung irritant), and ingestion. It should be kept in a cool, well-ventilated area. In case of spill, use appropriate tools to put the spilled solid in a convenient waste disposal container and neutralize the residue with a dilute solution of acetic acid. Hydrochloric acid is very hazardous in case of skin contact (sensitizer, corrosive, irritant, permeator), eye contact (corrosive, irritant), of inhalation (lung sensitizer, respiratory tract irritant), and ingestion (toxic). It should be kept in a dry container, kept away from oxidizing agents, organic materials, metals, alkalis, and moisture. In case of spill, dilute with water and mop with an inert dry material. Residue should be neutralized with dilute sodium carbonate. Chloride solution is hazardous in case of skin contact (irritant, permeator), of eye contact (irritant), ingestion, and inhalation (irritant). In case of spill, dilute with water and mop with an inert dry material and spread water on the contaminated surface. Iodide solution is lightly hazardous in case of skin contact (irritant), of eye contact (irritant), of ingestion, and inhalation. In case of spill, use appropriate tools to put the spilled solid in a convenient waste disposal container. And spread water on the contaminated surface. Silver nitrate is very hazardous in case of skin contact (corrosive, permeator), of eye contact (irritant), of inhalation, and ingestion.. Silver nitrate kept away from heat, sources of ignition, and combustible material. In case of spill, use appropriate tools to put the spilled solid in a convenient waste disposal container. Ammonium hydroxide is very hazardous in case of skin contact (toxic, corrosive, irritant, permeator), eye contact (irritant), inhalation (toxic to upper respiratory tract), and ingestion (toxic). Water should never be added to ammonium hydroxide and it should be kept a way from incompatibles such as metals, acids. In case of spill, dilute with water and mop with inert dry material. Neutralize residue with dilute acetic acid. Nitric acid is very hazardous in  case of skin contact (corrosive, irritant, permeator), of eye contact (irritant, corrosive), and ingestion. It is slightly hazardous in case of inhalation (lung sensitizer, respiratory tract and mucus membrane irritant). Nitric acid is explosive in the presence of reducing materials, of organic materials, of metals, of alkalis. In case of spill, dilute with water, mop with an inert dry, and neutralize the residue with a dilute solution of sodium carbonate. Acetic acid is very hazardous in case of skin contact (irritant), of eye contact (irritant), of ingestion, of inhalation. It is hazardous in case of skin contact (corrosive, permeator), of eye contact (corrosive). It should be kept away from sources of heat, ignition, and oxidizing material. In case of spill, Dilute with water, mop with an inert dry, and neutralize the residue with a dilute solution of sodium carbonate. Potassium nitrite is extremely hazardous in case of skin contact (corrosive, irritant), of eye contact (irritant), of ingestion, and inhalation. In case of spill, use appropriate tools to put the spilled solid in a convenient waste disposal container. Potassium nitrite should be kept dry, away from sources of ignition, heat, and combustible materials. Methylene chloride is very hazardous in case of eye contact (irritant), of ingestion, of inhalation, and skin contact (irritant, permeator). In case of spill dilute with water and mop with an inert dry material. Sulphate solution is hazardous in case of eye contact (irritant), skin contact (irritant), and ingestion. In case of skin contact, wash with soap and water, and cover area with an emollient. In case of spill, Dilute with water, mop with an inert dry material spread water on the contaminated surface. (ScienceLab, 2005) PROCEDURE Please refer to Lab 3: Qualitative Analysis Part 2- Anions chemistry Laboratory Manual 2013-2014, Durham College, pages 11-12 for full list of Materials and Methods. OBSERVATIONS Table 1a: Testing for the presence of Carbonate, CO32- anions 2 drops concentrated H2SO4 added, Test tube shaken Additional Observations Carbonate Solution, 3mL effervescence seen as colourless gas rises from bottom of test tube test tube feels much warmer, upon wafting the gas has a mildly unpleasant, acrid smell The presence of an effervescent reaction indicated that the sample had carbonate anions present. Table 1b: Testing for presence of Carbon Dioxide, CO2 ­ to confirm the presence of CO32- anions 2 drops 6M HCl 1 drop BaOH suspended over test tube Carbonate Solution, 3mL small amount of effervescence noted about 5 seconds after being suspended over test tube, the base of the droplet clouded with white precipitate The addition of HCl to the sample resulted in some rising gas bubbles, indicated that a gas was being formed. The clouding of the barium hydroxide droplet indicated it was reacting with carbon dioxide escaping the tube and thus confirmed the presence of carbonate anions in the sample. Table 2: Testing and confirming for the presence of Chloride, Cl- anions 5 drops 0.1M AgNO3 added NH4OH is added drop-wise Supernatant solution is decanted, 6M HNO3 is added Chloride Solution, 5mL cloudy white precipitate formed precipitate partially dissolved upon addition, distinct clear supernatant formed above remaining precipitate cloudy white precipitate reformed, small white granulations settled at bottom of test tube 6 drops of ammonium hydroxide, NH ­4OH, were added to the sample 6 drops of the nitric, HNO3, were added to acidify the sample The formation of a cloudy white precipitate in the presence of silver nitrate indicated that the sample had chloride anions present. The subsequent addition of ammonium and re-acidification of the sample resulted in the reformation of a cloudy whit precipitate, thus confirming the presence of chloride anions. Table 3a: Testing for the presence of Iodide, I- anions 5 drops 0.1M AgNo3 added Iodide Solution, 5mL cloudy pale yellow precipitate formed The presence of a cloudy yellow precipitate with silver nitrate indicates presence of iodide anion. Table 3b: Testing and confirming the presence of Iodide, I ­- anions Acetic acid is added drop-wise 2 drops KNO2 added 15 drops Methylene chloride added, test tube shaken Iodide Solution, 5mL Blue Litmus Paper confirmed the solution was acidic by turning red solution turned a mustard-brown colour 2 distinct layers formed in the test tube. The bottom layer was reddish magenta, and the top layer was a burnt-orange colour 2 drops of acetic acid, HC2H3O2, were added to acidify sample Upon confirming the sample was indeed acidic, it reacted with the potassium nitrate to change to a mustard-brown colour. The addition of the methylene chloride formed 2 distinctly coloured layers, thus confirming that the solution had iodide anions present. Table 4: Testing and confirming the presence of Sulphate SO42- anions 0.5mL of BaCl2-CaCl2 mixture added Test tube heated, stood for 10 minutes 5 drops 6M HCl, test tube heated Sulphate Solution, 3mL very faint wisps of cloudy white precipitate appeared noticeable cloudy white precipitate distributed throughout solution addition of HCl made test tube feel warm after heating test tube precipitate remained dispersed in solution In each instance of heating, the test tube was placed in a boiling water bath at 90oC The final heating of the test tube was for approximately 5minutes at 90oC The reaction of the sulphate solution with the barium chloride-calcium  chloride solution, when heated, resulted in the appearance of a fine white precipitate, indicating the sample had sulphate anions present. The subsequent addition of HCl and reheating resulting in the solution remaining relatively the same further confirmed that sulphate anions were present. Table 5a: Testing for Unknown Sample 7 for the presence of Carbonate, CO32- anions 2 drops concentrated H2SO4 added, Test tube shaken Additional Observations Unknown Sample 7, 3mL no visible effervescence no noticeable change to test tube’s temperature The lack of effervescence and heat produced by the sample indicated the absence of carbonate anions in the sample. Table 5b: Testing Unknown Sample for presence of Carbon Dioxide, CO2 ­ to confirm the presence of CO32- anions 2 drops 6M HCl 1 drop BaOH suspended over test tube Unknown Sample 7, 3mL no noticeable effervescence suspended droplet remained clear, despite being held over test tube for 15 seconds The sample did not react with the hydrochloric acid to produce a gas that reacted with the barium hydroxide, thus the suspended droplet remained clear. The results further confirmed the absence of carbonate anions. Table 6: Testing and confirming Unknown Sample for the presence of Chloride, Cl- anions 5 drops 0.1M AgNO3 added NH4OH is added drop-wise Supernatant solution is decanted, 6M HNO3 is added Unknown Sample 7, 5mL pale yellow precipitate formed no change to solution no change to solution 6 drops of ammonium hydroxide, NH ­4OH, were added to the sample Nitric acid, HNO3, was unable to be added to the precipitate as no clear supernatant was formed The lack of formation of a cloudy white precipitate in the presence of silver nitrate indicated that the sample did not have chloride anions present. The subsequent addition of ammonium and re-acidification of the sample were rendered purposeless. Table 7a: Testing Unknown Sample for the presence of Iodide, I- anions 5 drops 0.1M AgNo3 added Unknown Sample 7, 5mL cloudy pale yellow precipitate formed The presence of a cloudy yellow precipitate with silver nitrate indicates presence of iodide anion. Table 7b: Testing and confirming Unknown Sample for the presence of Iodide, I ­- anions Acetic acid is added drop-wise 2 drops KNO2 added 15 drops Methylene chloride added, test tube shaken Unknown Sample, 5mL Blue Litmus Paper confirmed the solution was acidic by turning red solution turned a mustard-orange colour  2 distinct layers formed in the test tube. The bottom layer was reddish-purple, and the top layer was an orange-brown 2 drops of acetic acid, HC2H3O2, were added to acidify sample Upon confirming the sample was indeed acidic, it reacted with the potassium nitrate to change to a mustard-orange colour. The addition of the methylene chloride formed 2 distinctly coloured layers, thus confirming that the solution had iodide anions present. Table 8: Testing and confirming Unknown Sample for the presence of Sulphate SO42- anions 0.5mL of BaCl2-CaCl2 mixture added Test tube heated, stood for 10 minutes 5 drops 6M HCl, test tube heated Unknown Sample, 3mL no precipitate formed no noticeable precipitate formed no change to solution In each instance of heating, the test tube was placed in a boiling water bath at 90oC The final heating of the test tube was for approximately 5minutes at 90oC The lack of precipitate formation in the test indicated that the sample was absent of sulphate anions. This result was further confirmed by the subsequent addition of hydrochloric acid and reheating failing to produce a precipitate. DISCUSSION: A strong acid such as H2SO4, sulphuric acid, combined with carbonate produces an effervescent reaction due to the formation of carbon dioxide. The heat felt from the test tube was a result of the exothermic reaction that the carbonate solution underwent in the presence of a strong acid. Sulfuric acid is a strong acid, but only for the first H, so it dissociates into H+ ion and the bisulfate ion, HSO4-. HSO4- is a weak acid and does not dissociate to a great extent, but it also reacts with carbonate (Dartmouth College, 2003). The presence of sulphur may have accounted for the mildly unpleasant scent wafted during the experiment. As indicated by the results of Table 1b, the formation of CO2 acted as a positive indicator for the presence of CO32- in a solution, as expressed by: 2H+(aq) + CO32-(aq) → H2O(l) + CO2(g). The exposure of the produced gas, carbon dioxide, to barium hydroxide resulted in the a cloudy white precipitate due to the formation of barium carbonate as expressed by: H2O (l) + CO2 (aq) + Ba2+ ­Ã‚ ­(aq) → BaCO2 (s) + 2 H+(aq). The addition of 01M AgNO3, silver nitrate, to the chloride solution resulted in the formation of a white precipitate due to the formation of silver chloride as expressed by: AgNO3 (aq) + Cl-(aq) → AgCl(s) + NO3 (g). It is interesting to note that chlorides are generally soluble, with the exception of lead(II) and silver chloride. When concentrated NH4OH was added to the silver chloride precipitate dissolved due to the formation of an ammine complex, [Ag(NH3)2]+. Silver nitrate is generally acidified with dilute nitric acid to prevent the precipitation of other non-halide silver salts (Brown, 2012). Nitric acid acidified the solution due to the addition of H+ ions to the solution, resulting in re-precipitation, thus definitively indicating the presence of chloride anions. This is expressed as AgCl(s) +  2NH3(aq) → Ag(NH3)2+(aq) + Cl-(aq) Ag(NH3)2+(aq) + Cl-(aq) + 2H+(aq) → AgCl(s) + 2NH4+(aq) The addition of 0.1M AgNO3 to the iodide solution resulted in the formation of a cloudy yellow precipitate as expressed by: AgNO3(aq) + I- → AgI(s), which as a precipitate is insoluble in concentrated ammonia. The addition of 6M acetic acid, HC2H3O2, acidified the solution, as confirmed by the litmus test. The newly acidic solution reacted with potassium nitrite, KNO2, reducing the nitrite to nitrogen dioxide as expressed by: I-(aq) + KNO2 → KI(aq) + NO2(g). The liberation of iodine in the reaction resulted in a brownish change in colouration of the solution (SUNY Chemisty, 2005). The failure of the sample to turn a reddish-brown may have been a source of error due to a failure to sufficiently rinse the cleaned test tube with DI water. Methylene chloride, CH2Cl2, which is a non-polar organic compound was added to the solution reacted with the iodide in the solution to form a violet coloured layer of denser solution, which settled at the bottom of the test tube. An alternative means of testing for the presence of iodide anions would have been to use starch, which forma a characteristic blue-black complex. The addition of the barium chloride-calcium chloride mixture, BaCl2-CaCl2, to the sulfate solution resulted in the formation of an insoluble white sulphate, barium sulphate as expressed by: Ba2+(aq) + SO42-(aq) → BaSO4(s). Other insoluble barium salts contain anions of weak acids (CO32-, SO32-and PO43-). Precipitation of these anions is generally prevented by acidifying the solution (Yoder, 2014). The products of the reaction were made more prominent by the catalyzing the reaction with heat, resulting in a more noticeably fine white precipitate distributed throughout the solution. The addition of 6M HCl, hydrochloric acid, served to acidify the solution, further illustrating the insolubility of the barium sulfate precipitate, thereby confirming the presence of sulphate anions. The unknown sample was placed through all confirmatory tests. It failed to react with Sulphuric acid and hydrochloric acid to produce an effervescent reaction, indicating it was carbonate absent. Unknown Sample 7 did not react with the BaCl2-CaCl2 mixture to form a precipitate regardless of heat, indicating the absence of sulphate anions. Unknown Sample 7 formed a pale cloudy yellow precipitate upon the addition of silver nitrate, immediately indicating the presence of iodide anions, disqualifying the need to test  further for chloride. The addition of acetic acid to Unknown Sample 7 provide a sufficient acidic environment for the potassium nitrate to release iodine, thus the solution appeared as a dark mustard orange. The methylene chloride confirmed the presence of iodide anion when a distinct reddish-purple layer settled at the bottom of another distinctly coloured layer of solution. CONCLUSION: Based on the results of the experiment, Unknown Sample 7 demonstrated the formation of a precipitate in the presence silver nitrate, a change in colouration when mixed with potassium nitrate, and the formation of 2 distinctly coloured layers when methylene chloride was added to the solution and shaken. In accordance with the chemical properties exhibited by the 4 known anions during the qualitative testing, it can be concluded the Unknown Sample 4 clearly demonstrated the characteristic chemical responses of a solution with I- ions present. QUESTIONS 1. An ion is an atom that has lost or gained an electron to form a charged particle. 2. An anion is a negatively charged particle due to the atom gaining one or more electrons. A cation is a positively charged particle due to the atom losing one or more electrons. 3. H2SO4(aq) + Na2CO3(aq) → Na2SO4(aq) + H2O(l) + CO2(g) 4a. Aluminum ion: Group IIIA, Al3+ 4b. Sulphur ion: Group VIA, S2- 4c. Iodide ion: Group VIIA, I- 4d. Oxygen ion: Group VIA, O2- 4e. Chloride ion: Group VIIA, Cl- REFERENCES Birk, J. P. (2001, December 4). General Chemistry With Qualitative Analysis. Retrieved from Arizona State University: http://www.public.asu.edu/~jpbirk/qual/qual.html Brown, W. (2012). Chemical Tests. Retrieved from Doc Brown’s Chemistry: http://www.docbrown.info/page13/ChemicalTests/ChemicalTestsa.htm Dartmouth College. (2003, May). ChemLab Chapter 5. Retrieved from Qualitative Analysis of Cations: http://www.dartmouth.edu/~chemlab/chem3-5/qual_an/overview/procedure.html ScienceLab. (2005, October 10). Material Safety Data Sheet (MSDS) List. Retrieved from Science Lab: http://www.sciencelab.com/msdsList.php SUNY Chemisty. (2005, December). Anion Analysis. Retrieved from Chemistry 112: http://employees.oneonta.edu/kotzjc/LAB/Anion.pdf Tro, N. J. (2011). Essential Introductory Chemistry (4th ed.). Toronto: Prentice Hall. White, R. (2013-2014). Qualitative Analysis Part 2- Anions. Chemistry 1 Laboratory Manual, 7-9. Yoder, C. (2014, November). Qualitative Analysis of CAans and Anions. Retrieved from Wired Chemist: http://www.wiredchemist.com/chemistry/instructional/laboratory-tutorials/qualitative-analysis

Kate Chopin, the Awakening

The Awakening by Kate Chopin 1st half: Page 1-60 Plot Summary: Leonce Pontellier and Edna Pontellier take their children to Grand Isle to spend their summer vacation. While on that trip Edna learns how to swim which becomes a huge revelation to her, in a sense of gaining some control over her life. Also Edna makes a great connection with Robert Lebrun, a charming man who pursues to obtain Edna's attention and affections.As he flees to Mexico, the narrative of the story shifts to Edna’s complexed feelings towards Robert and her search for social freedom. With the summer being over and Edna going back to New Orleans with her husband, Edna gradually re-evaluate her priorities and takes a more active role in her own happiness, as she starts to withdraw from some of the duties traditionally associated with motherhood and as a house-wife. Themes: * Self-destruction: The illusion of being able to control oneself, while being controlled by society and other circumstances around you wi ll eventually lead to self-destruction. Edna the protagonist is in search for social liberation, and fundamentally ends up self-destructing herself by taking an action she believes can only be controlled by herself. ) * Femininity: The restrictions and expectations put on a woman are purely on stereotypical and repressive images about a societally accepted idea of femininity. (In the era that Edna lived in, the gender roles were set in stone, men would work and women would be set to be home and take care of the kids and house, women like Edna were seen as possessions and trophies. * Identity: Dissatisfaction with the labels put on individuals can result in the loss of identity and the desire for independence outside of society. ( The discontent with the labels Edna has as ‘wife†, â€Å"mother† has resulted in the loss of her true identity, however the desire to gain back her identity leads her to social alienation and many controversies. ) Characters: * Edna Ponte llier: The protagonist of the novel, was described as â€Å"She was rather handsome than beautiful.Her face was captivating by reason of a certain frankness of expression and a contradictory subtle play of features. Her manner was engaging† (4). Wife of Leonce and a mother. Is presented as a complex and dynamic characters that develops throughout the story. Edna a very preserved individual who follows the attributes of society, develops quite aggressively from being a conserved young women to an individual who violets all of the morals that were set in her society. Robert Lebrun: A complex character who encounters himself in a love triangle with married woman, he plays a big part in Edna’s awakening. As he escapes to Mexico to flee from a relationship that was not allowed to happen, leading the novel to hit the climax of the story. * Leonce Pontellier: is described as â€Å"wore eyeglasses. He was a man of forty, of medium height and rather slender build; he stooped a little. His hair was brown and straight, parted on one side. His beard was neatly and closely trimmed. (1) Edna’s husband, Leonce plays a big part in the novel, he is a man who treats women as properties and values, very materialist and spends his time away from home doing business. Setting: * The Awakening is set in the late nineteenth century on Grand Isle, off the coast of Louisiana, where the summers are spent. It continues to New Orleans where Edna and her family live, in a relative luxurious house in the French quarters, â€Å"a very charming home [†¦] it was a large, double cottage with a broad front veranda, [†¦] the house was painted a dazzling white. (49) * Society in the nineteenth century was very repressed, women had to obey their husbands and duties, as Edna become more ‘awakened† and self-dependent, her society begins to isolate her. Literary Devices: * Children: The imagery and verbal illusion of children are present throughout the nove l. Edna is often symbolically seen as a child, her undergoing a form of re-birth as she sees the world from a fresh perspective. * Water: symbolic, water represents re-birth. Edna awakened while swimming where she realized that she could be the only one who can control her own movements. Birds: The caged birds symbolically represent Edna’s entrapment in society, as well as the women in the nineteenth century in general. â€Å"A green and yellow parrot, which hung in a cage outside. †(1) Other Critical Approaches: * Archetypal Approach (Metamorphosis/change): Edna undergoes a sudden but dramatic transformation, going from a conservative role to an independent woman. (As Edna obeys her husband and follows the rules of society, but transforms into a woman who goes by her own rules, and dismisses every task given to her. )

Applicability of Visualization and RFID Technology -myassignmenthelp

The work scenario is that in my organization different individuals and units perform several functions independently. Each work station is served with a computer and one server. The company is to provide each workstation with integrative linkage to facilitate communication.  Ã‚   The information technology infrastructure provides a chance of using a multiple different service system. The Radio frequency identification (RFID) tags network system helps to come up with different service systems. Huang et.al (2014, p.497) defines RFID as a technology using radio waves in identifying of signals, and virtualization as a technical architecture that links different resources into one single environment. Both visualization and RFID technologies are important. The visualization system is useful because it reduces physical readers and operational costs when using information technology systems. The RFID is useful in business in tracking and identification of network infrastructures signals. The virtualization of RFID tag network system is useful in business because it provides social infrastructure like the internet. Example is the global internet network architecture that uses RFID visualized tag network system (Huang et.al. 2014, p.490). The use of RFID visualized tag network system purpose is to allow multiple service systems users to share the same infrastructure. Technologies in the world are creating are virtual networks or systems are compatible to devices and RFID tag network system (Al-Kassab et.al. 2014, p.420). Visualization is used to create virtual network address in combination with RFID infrastructure which is used to create service center location. Al-Kassab et.al (2014, p.495) explains further that business use service engines to obtained information and creating social network systems with the aid of the two technologies. Al-Kassab, J., Quertani, Z and Neely, A 2014, visualization and support management decisions models, Journal of information technology & decision making, 13 (02), pp. 407-428 Huang, W., Ding, C., Wang,S., Jing, X and Zhang, Z 2014, RFID indoor visualization positioning data, International conference systems and informatics, (pp.497-504), IEEE.

MANAGING PEOPLE IN FACILITIES MANAGEMENT Essay Example | Topics and Well Written Essays - 7250 words

MANAGING PEOPLE IN FACILITIES MANAGEMENT - Essay Example At this juncture, managing work load and allocating the requisite tasks in a business organization has become one of the most essential works in the modern business world. Managing the employees in an organization is also crucial in the business world. This research will comprise the context of recruitment and management of the employees. It will also enumerate certain ways that would help the companies to motivate and retain staff. Managing resources is one of the pivotal tasks required for the success of any organization. This research work will implicitly explain the various aspects by which a firm can tackle its labour resource. 1.1Work Load Planning and Work Allocation There are various approaches of workload planning and work allocation. Work load may be termed as logical classifications of aggregate work executed by an organization. Work load planning and work allocation is two very close but different terminologies. The organizational managers first analyze the amount of work load in an organization and then they allocate the following to different employees in terms of the different work allocation theories. In general, the approaches of work load planning set by an organization are almost same for all the public and private sectors (Sabharwal and Prashant 25) Approaches of Work Load Planning One approach adopted by the managers of organizations is related to simple estimation of the company’s current workload and workforce. After making that inference, they enumerate the various competences of the organization. Efficient work load planning involves assessing the future work load, work force and competences in an association. Sometimes the mangers in an organization compare the workloads and work forces along with their competences in present and future. By doing so, they sufficiently get access to the surplus and gaps in the working processes. The managers introduce new plans to approximate the future workforce requirements. After a workforce p lan is estimated, the company ensures that the concerned model remains valid and observes that its mentioned objectives are executed in the working process of the firm. Thus, for the purpose of work load plans, a company uses estimation techniques, models, and theoretical approaches. The planning may be done on the basis of the type of work or the method by which the work would be executed or simply on the basis of the workers who would execute the task. Example, Gantt charts and bar diagrams are often used in business firms to execute the different operational plans (Bhatia 45). Approaches of Work Allocation There are different ways to allocate work among the workers in a company:- Contractual agreements are often introduced in the operations of a business organization. In this method, the workers are given specific contracts to complete their tasks. Sometimes the skills and experiences of the workers are also judged while allocating certain jobs to them. The more important and com plex the work is the greater skills are required from the workers. This is the theory of comparative advantage. Sometimes time it is also an important factor in work allocation. The workers who have the time to execute certain work in an ongoing organization are allotted new upcoming projects. (Wuttke 37). 1.2 Advantages of Work Load Planning and Work Allocations Proper work load planning and work allocation is the only key that helps to achieve operational success in a firm. The firm can successfully reduce its cost of manoeuvre in business with the efficient planning methods. Allocating the work to appropriate employees helps the firm to execute the requisite job promptly and effectively. Division of labour has always

Business letter 2 Essay Example | Topics and Well Written Essays - 250 words

Business letter 2 - Essay Example A little reflection will show that there are a couple of reasons for this. One is that Emergent Technologies has developed a unique procedure for the mass storage of information via its SuperDiscâ„ ¢. As you know the patent and copyright for this invention has been lying with the US Patent Office for some time now, and it is only a matter of weeks before the patent will be registered in the name of your company. This alone is sufficient to increase the value of net assets by $500,000. Another thing to be considered is your excellent business reputation over ten years of business. Your company and its products are well-known and have considerable goodwill among the business community. According to Meigs and Meigs (1993: p 474), goodwill can result because of owner or product reputation, leading to extra sales and business contacts in the marketplace. In the event of a sellout, the new buyer will gain from this goodwill that you had earned and accordingly, you can arrange for an eva luation of goodwill and even record it on the books before making the sale. A conservative estimate by us looking at industry standards puts the value of Goodwill at $500,000 for your business at this point.

Experience Through Work Module Essay Example | Topics and Well Written Essays - 2750 words

Experience Through Work Module - Essay Example Its expansion into numerous international markets has led the company into becoming a symbol of globalization, over and above, the spread of America’s life style. Moreover, the prominence it holds globally has enabled to become the topic of discussion particularly in terms of obesity, consumer responsibility, and corporate ethics. In essence, the restaurants is said to have both drive through service, and counter service in outdoor and indoor seating. In global operations, the McDonald’s has become a global icon and is known as â€Å"McDonaldization of the society†. Of importance to note is that McDonald’s UK has thrived in the competition field due to the presence of an excellent management team that has ensured that the Company has a strong work force especially in terms of customer satisfaction and delivery services. This has been emphasised through the Human Resource Management, which is the most powerful department in McDonald’s Company. ... nagerial activities, functional areas, nature and impact of the company especially in terms of employees’ satisfaction that ensures that work is done effectively. Principally, there are diverse ways in which managers perform their duties in accordance to the kind of company that he or she is mandated to work for. It is without doubt that management is crucial in every organisation or company as it works as core of a company that has a competitive edge. 2 My Responsibilities included; 1. Assisting in man power planning 2. Involved in designing job analysis 3. Determining wages and Salaries 4. Recruitment and Selection of Employees 5. Assist in performance appraisal 6. Prepare training and development of the work force 7. Employee welfare and motivation 8. Implementing of McDonald’s Policies In essence, as a HR department it is crucial that a record of the future plans is keep to ensure that the company is focused on the goals and objectives that it intend to have current ly and the future. The record further entails the number of employees that intend to leave McDonald’s for one reason or another. Besides, it analysis the productivity levels o f the workers in relation to the competition factor. Consequently, any technological changes that the company goes through are officially noted in relation to the expected growth in sales in the company (Barney 1991). Apparently, the HR department is solely responsible for analysing and giving job description particularly when there are vacancies in various departments in the company. Job analysis is gathering details about the duties, responsibilities, required skills, over and above the work environment. On the other hand, job description regards the tasks, and responsibilities that match particular qualifications of

Personal Narrative Essay Example | Topics and Well Written Essays - 1000 words - 3

Personal Narrative - Essay Example I was happy and determined to bring in new energy and give my team a winning goal. In the last minute, I intercepted the ball and dribbled down the court, face to face with the goal keeper. As cheers grew wilder, I send a strong shot past the goalkeeper to the back of the net. The loud cheers made me very confident but only the opposing team shared my excitement. After noticing the disappointment on my teammates, it hit me hard that I had scored in our post to give our opponents a late goal (Heim, 2013). When I got home, my brother noticed the disappointment in my voice and gloomy face and I had to give out the details of my mistake and what it meant to the team. He explained to me that he scored for the opposing team to give it a win in the championship when he was in college and, thus, I should take it easy because there were worse situations. When I went to school the next day, I felt silly to face my mates but my brothers story gave me confidence because I realized that I am not the only one who has scored for the

Factors Affecting Customer-Centric Website Design Essay

Factors Affecting Customer-Centric Website Design - Essay Example The paper concludes that website designers must exploit Cloud technologies and use teams that are multicultural and gender sensitive when designing their websites if they truly want to make their customers the centre of their work. Introduction The infrastructure known as the Internet has been at the heart of globalisation, flattening the world, and causing disruptive change in business bringing about new models and new products and services. At its core the web browser has been the most visible interface for consumers and businesses to enjoy these changes brought about by the Internet. With increasing use and time spent on the internet, and with the accompanying information overload, businesses are seeking to capture differentiate themselves through website designs that attract and engage customers. It is within this context that web designers are being tasked to come up with customer-centred websites. Customer-centric web design aims at creating a website that is intended to meet t he specific needs of customers as opposed to all web visitors. When considering customer-centred design, Schneider (2011) recommends focusing on the customer buying process. Garrett (2003) suggested that there are six key areas that the web designer will need to focus on to enhance the users’ experience: visual design, information architecture, information design, navigation design, interaction design, and content. Given the highly fluid nature of the internet and its associated technologies, web designers are finding it difficult to design the much desired customer-centric websites. In the next section, the paper begins by trying to understand why customer-centric web design is so important for any individual or organisation that is putting up or has a website. After that the paper discusses three factors that make achieving customer-centric web design difficult. First it discusses the effect of culture and gender, then the impact of the emergence of the mobile web and f inally the rise of prosumerism. The paper then concludes with suggestions on possible techniques that web designers could use to tackle the challenge posed by these three factors. Literature Review Importance of Customer-Centric Web Designs Naturally, one would ask why is achieving customer-centric web designs so important to warrant its discussion? Porter (2001) argued that the internet weakened industry profitability by influencing the five forces that underlie industry structure. The Internet reduced switching costs and shifted bargaining power to end consumers. The web essentially changed the dynamics of the relationship between organisations and their customers. The customer is now more empowered and more in control of the relationship than ever before (Perfetti, 2006). The web has not only made it easier for customers to find alternatives but it has also lowered the costs they incur either in searching for alternatives or moving to them. Customers only care about that whic h is important to them. This means that if they cannot find the products, services or information that brought them to a particular website, they will simply go elsewhere. To prevent customers from going elsewhere makes it necessary for organizations to design their websites with the customer as the core focus. Also, it has been found that there is a big distinction between the numbers of people who visit a website and those

Universal healthcare the only answer Essay Example | Topics and Well Written Essays - 1500 words

Universal healthcare the only answer - Essay Example Healthcare is a human right, also in the Constitution under life liberty and the pursuit of happiness, but many Americans do not feel its benefits. Universal healthcare is the only answer because it will also save money. â€Å"We can eliminate wasteful inefficiencies such as duplicate paper work, claim approval, insurance submission, etc. We can develop a centralized national database which makes diagnosis and treatment easier for doctors† (Universal, 2009). There are many reasons to support universal healthcare supported by community health principles. Universal healthcare is about representing a true community healthcare principle of access for all, not just for all who can afford it. In terms of base arguments, supporters of national healthcare tend to argue that there should be a single-payer system in which healthcare is financed by the government but the government does not take control of the system in a way that diminishes privatized options. But on the other hand, â€Å"The current crisis in the U.S. healthcare system may be more one of perception than fact. While it is true that in certain areas of the country and for some segments of the population there are real healthcare access and coverage problems, coverage is available in most places and for most individuals. The magnitude of the crisis may not be significant enough to justify the major changes in the healthcare delivery system that will result from present reform proposals† (Kalkhof, 1994). It is the recommendation of this report that the current system of managed care observed at modern healthcare facilities should be changed from a consumer-based platform to a patient-based platform in which there is universal coverage and a renewed attention to upholding patient rights. â€Å"According to principles of American paternalism, no American should go without food and water, shelter, clothing, sanitary facilities, protection, physically and legal, equal opportunity,

Teaching Citizenship Essay Example | Topics and Well Written Essays - 2000 words

Teaching Citizenship - Essay Example Citizenship, exclusively, is both a discrete subject and also a culture - which is a way of living with its own distinct set of values, attitudes and nature which supports continuous lifelong learning. Since citizenship education is so completely new to the curriculum in most schools, the timetable contexts in which it takes place are likely to vary quite considerably. 'Many schools are recognizing the wider benefits of citizenship and offer 'special themed days' with a collapsed timetable and specialist speakers. In some schools, citizenship may be part of, and an extension to, existing programme of Pastoral, Social and Health Education (PSHE). In others there may be timetable slots quite explicitly labelled 'Citizenship'. In yet others, the requirements of the citizenship curriculum may be addressed within a framework of 'Humanities' teaching. Still other schools may decide to address citizenship in a totally 'embedded' cross-curricular way, identifying specific elements of the citizenship curriculum to be included in individual subject departments' schemes of work. Some schools are taking the opportunity to reflect on their organisation and are embracing a citizenship ethos in which citizenship concepts and knowledge are developed through active participation and greater learner responsibility. These schools have effective schools councils, student consultation and representation, shadowing, specialist student training, peer work, whole school special focus days, local and national student elections, involvement with other schools and links with the wider community including their local councilors and MP. Trainees on the course are encouraged to see themselves, first and foremost, as citizenship teachers capable of straddling most, if not all, of the fields of knowledge and pedagogical approaches to which reference has been made. Realistically, and in order to build a viable personal teaching timetable while on school experience, there may be a need to undertake some work in a 'traditional' subject allied to your degree specialism. Some students, (for example, those with degrees in psychology or sociology), may be able to contribute to post-16 teaching in these subjects. Trainees will need to be enterprising; prepared to take considerable responsibility for their own professional development; daring enough to want to shape the future of citizenship education; and dedicated to (and preferably with some successful experience of) 'making a difference' to the lives of young people'. (Graduate School of Education, Copyright 2007 - University of Bristol.) Teaching Citizenship through history: 'Citizenship and History can be seen as natural partners - this was confirmed by Sir Bernard Crick, the founding father of the modern Citizenship education movement in England: " My personal view, that I have had to be a little bit discreet about at times, is that of all the other subjects History may have (should have) overall the greatest role to playSeeley

Peer Violence Essay Example for Free

Peer Violence Essay Peer violence/abuse is something that takes place in the everyday life of some people and their families. Peer violence/abuse is when a person undergoes improper or unfair physical or verbal maltreatment, injury, sexual assault, violation, unjust practices, wrongful practice or custom, offense, and crime. There are many different types of peer violence such as verbal, physical, cyber bullying, and social alienation. As you continue to read you will better understand the effect, consequences (in school and out of school), and examples of peer violence. Youth violence has played a big part of everyday life for some; youth violence includes bullying, punching, slapping, verbal abuse and using weapons, towards another. These violent acts are a disruption to people’s lively-hoods and to the learning process. The most serious effect that youth violence has on people is death and injury; most students are victims of homicides in the schools and suicides at home. Most of these deaths occur before, after, or during lunchtime. Other victims can be examples of nonfatal injuries like cuts, broken bones, bruises and even gunshot wounds. Some can even have a long-term effect on a person emotionally/mentally, a person can suffer depression, fear other people, anxiety and even post-traumatic stress which does not just effect the person but it also effects the persons immediate family and close friends. Peer violence can affect the way a child lives and their lives, they will feel shame for being a victim and won’t tell anybody what’s going on and could be afraid that the problem might escalate if they do tell a trusted adult. In recent news, in Southern Las Vegas two brothers were sentenced to jail and correctional facilities for the bullying of a disabled boy who attended their school. The boys had one of their friends record the attacking of the boy and posted it on YouTube. One of the boys was sentenced to 12 months of probation and 40 hours of community service while the other was sentenced to serve time at Spring Mountain Youth Camp with supervision until released. Consequences are one of the things many people do not think about before they began bullying each other or began attacking one another. In most schools a punishment is 3 to 6 days of suspension and even a court date with the victim. In Las Vegas depending on your age you can get anything from probation to 30 days in a juvenile correction center or a correctional center such as boy’s town or Spring Mountain Youth Camp. http://en.wikipedia.org/wiki/Columbine_High_School_massacre#Medication\ http://www.modernmom.com/article/the-effects-of-school-violence-on-victims http://www.modernmom.com/article/the-effects-of-school-violence-on-victims

Importance Of Mobile Banking System In The Maldives Finance Essay

Importance Of Mobile Banking System In The Maldives Finance Essay INTRODUCTION Banks play a vital role in the economic life of a nation. The wellbeing of an economy is intimately correlated to a healthy banking system. Bankers borrowing; lending and related activities make possible the process of production, distribution, exchange and consumption of wealth. Therefore banks are very valuable associates of economic growth. Banks play an imperative role in utilization of the resources of the country. Banks mobilize the savings of the people for the investment purpose. In the absence of bank, a countrys major portion of capital will remain redundant. Mobile banking can be described as a common phrase used for performing balance checks, account transactions, making and receiving of payments etc via a mobile device; commonly mobile phones. Terms such as M-Banking and SMS Banking are commonly used for mobile banking. This report will look in to the importance of introducing a mobile banking system to the Republic of Maldives, A country formed of 1190 coral islands each separated by open sea. According to the MMA (Maldives Monetary Authority- Central Bank) they are gearing up to launch a mobile banking system in the country from 1st Feb 2011. MMA named its upcoming mobile banking system as Keesa a local word used for wallet. In an Interview given to National Television in 2010 (MNBC-One) the Governor of MMA Mr. Fazeel Najeeb quoted The Maldives Mobile banking system designed to bring a revolution to the financial sector and setting an example for the rest of developing countries in the world. (MNBC-One, 2010) OVER VIEW OF MALDIVES ECONOMY The GDP growth averaged 8.0% over the past two decades raising per capita income about US$ 2,800, the highest in the region and moving the Maldives well into middle income status. After contracting by 4.6% in 2005 due to the tsunami induced fall in tourist arrivals, the economy rebounded by 19.1% in 2006 and appears to have remained robust in 2007. The population of Maldives was estimated 2, 98968 according to the preliminary census 2006. Fishing and tourism plays a vital part of Maldives economic progression. According to MMA there are 6 commercial banks in Maldives with 176186 Account Holders. At present there are only two Mobile service providers in Maldives, who provides Service for 259889 Customers. Dhivehi Raajeyge Gulhun Pvt. Limited or Dhiraagu is Joint Venture Company formed between the Maldivian Government and Cable Wireless and commenced its operations in the Maldives in 1988. (Dhiraagu, 2009). Wataniya Telecom Maldives Started out operations in Maldives as a subsidiary of Wataniya Telecom in February of 2005, it has now become the preferred mobile network for Maldivian locals and tourists alike. The companys quest for perfection and dedication to complete customer satisfaction has placed it on the forefront of Telecommunication solutions in the Maldives. (Wataniya Telecom Maldives 2009) Tabulated profile of Maldives Details % No Total population 298968 Between 15 64 years 62.5 186904 In Employment 110231 Workers on Male 10.3 38971 Workers on Atolls 89.3 71260 Employment By Sector Fishing Industry 11 12125 Tourism 23 25000 Government 31 34000 Others 35 39000 Expatriate Workers 70075 Mobile Subscribers 259889 Resident on Male 41.5 106554 Resident on the Atolls 59.5 153335 Bank Accounts 176186 Resident on Male 65 113893 Resident on The Atolls 35 62293 ATM Cards Issued 62275 Source: Ministry of Planning and National Development Key Indicators 2006  ¨ Maldives 2006 preliminary census figures  ¨ Monthly Statistics, February 2008-MMA  ¨ CGAP survey results from Maldives mobile operators  ¨ CGAP survey results from Maldives banks A MOBILE BANKING SYSTEM WILL RE-SHAPE AND AVANCE MALDIVIAN ECONOMY. Referring to the facts and figures given above (Under over view of Maldives economy) and Tabulated portfolio of Maldives, more than 95% of Maldives is covered geographically by the mobile operators in Maldives. Mean while nearly 90% of population owns mobile phone. According to the Ministry of Planning and National Development Ministry the mobile operators also already have the capacity of providing mobile banking service with minimal investment. (Key Indicators, 2006) The mobile banking system will benefit the Economy in following ways Implement state of the art inter-bank settlement and eliminate risk and increase the safety and efficiency in payment systems Introduce full cheque truncation and automate clearing Promote economic efficiency in the country Reduce dependence on cash and paper based instruments by facilitating electronic payments Establish a fully interoperable retail payment system using cards, mobile and Internet Make banking accessible to all citizens of the Maldives, despite adverse geographic conditions Government and banking sector Mobile banking would save costs associated with printing and supplying cash, free up resources currently used by banks to deliver banking services, automate the banking and clearing system, reduce the transaction costs of banking and payments settlements, deliver banking services to the whole country, increase national savings, and revolutionize the financial industry. Fishing industry According to preliminary census figures of 2006, 11% of Maldivian work force is engaged in fishing industry. Exporting different products of fish is also one of the two main sources of income for the government. Its estimated that there are more than 12000 fishermen in Maldives who spend more than 70 percent of their life in the open sea. Therefore introduction of the mobile banking system, all fishermen are led to access the bank and carry out important transaction any time. This will ease and solve lot of existing difficulties for them regarding banking. It will also circulate more idle cash and contribute to the economy as a whole. Tourism Sector Maldives economy is vastly dependent on Tourism Sector. According to former president of Maldives Mr. Gayoom, tourism is life blood of our nation more than 23 percent of economic workforce is deployed in tourism sector. There are roughly more than 25000 people from 190 different islands working. 90% of these people are stationed at resorts who basically only travels to their native islands twice a year. There are no personal banking facilities at present in most of the resorts. Therefore to send their earnings to support family and receiving money or accessing to banking services are very complicated presently. With the introduction of Mobile banking system, these existing complexities for banking will be solved. MOBILE BANKING: PROS CONS Mobile banking also have unenthusiastic side, though over all mobile banking system is very efficient and generous to business men and other individuals. Pros Banking everywhere any where: Banking is a basic necessity in todays economic world. Accessing a bank or carrying out a banking transaction is all most part and parcel of every day. Mobile banking allows banking from anywhere and everywhere. Physical presence is not required to make a banking transaction. Therefore mobile banking saves time and energy. Important Notifications: The important notifications such as when an account is debited or credited, it will inform in almost no time. Therefore basic banking functions becomes more simple informative on real time. Important means for Accounts Safe keepings It enhances to minimize unauthorized transactions. Since the account holder will be notified immediately via a text. Therefore to be a victim of a bank fraud makes less likely and in case can act upon fraud quickly. Fast and easy payment: Mobile banking allows paying bills, utilities, insurance or any other parallel payments on time. Important means of banking in case of emergency: Mobile banking allows banking 24/7, and more over no waiting time is required. Therefore it is a vital means of banking-in case of emergency Cons Security: Though there are few viruses and Trojans targeted for mobile phones, mobile phone users can be attacked by a phishing scam. For example when a mobile banking user receives a forged text requesting for account passwords it might goes to a hacker pretending as the banker or teller. Compatibility All transaction might not be able to proceed in any phone and for some of the cheaper -phones mobile banking is not compatible at all. To get most out of mobile banking a good smart phone is necessary. Cost Though mobile banking is relatively cheaper and save times, some of the banks charges extra fee for mobile banking and in most of the cases extra software charges are applicable and add upon banking expenses. LITERATURE REVIEW Mobile banking closes poverty gap (BBC, 2010) This report published in BBC by Jane Wakefield, highlights the importance of Mobile banking to transform the way people in the developing world, transfer money and how it is poised to offer more sophisticated banking service which could make a real difference to people This statement highlights that currently there are 2.7bn people living in developing countries who do not have any means to access financial service or banks. Simultaneously 1bn people throughout Africa, Latin America and Asia own a mobile phone (BBC, 2010) Further this report shed lights on Mobile banking as a very powerful way to deliver saving and money transfer services to the billions of people in countries like Kenya and Uganda where there are thousands of people with no means to any access to financial institutions. Over all, this report makes it more vivid that the success of mobile banking in such countries there by closing the poverty gap. Africas mobile banking revolution (BBC, 2009) This report by Luice Greenwood provides the facts and figures of how a mobile banking system could contribute Africas economy so vitally. It also highlights that Millions of Africans are using mobile phones to pay bills, move cash and buy basic everyday items. Africa has the fastest-growing mobile phone market in the world and most of the operators are local firms. Accordingly the statistical data provided throughout the report, briefs about the countries like South Africa and Kenya mobile banking service providers has touched millions of life by means of savings, security and transfer of cash. The simplicity of mobile banking system in Africa is also lessoning the rest of the world. To set up a bank account by a mobile phone is so easy and straightforward that all it requires is that just a phone and ID card to register anywhere from the country by an approved agent. The system activates the account in seconds and depositing and transferring of cash are right away at the fingers tips This report shows how practical mobile banking system can be and how easy it could be serving the larger population like In Tanzania just 5% of the populations have bank accounts. In Ethiopia there is one bank for every 100,000 people. EMPIRICAL EVIDENCE With the introduction of mobile banking system there has been a lot of progress in the socio- economic factors in many countries. The implication of mobile banking seems like more important for developing countries than developed countries where lots of branches of banks are available at a threshold. Countries like Kenya, South Africa and Tanzania has shown the world how important mobile banking system is for under developed and developing nations. Lessons from the lights of literature review, I personally believe in the importance of the introduction of mobile banking system in Maldives. This technology would contribute to government sector, banking sector, fisheries industry, tourism sector and islanders from all islands as a whole. To overcome the shadows cased on banking sector in Maldives, by its natural geographic obstacles mobile banking can be an important tool. PERSONAL VERDICT Providently I have had an opportunity to work for Maldives Tourism Development Corporations as an Operations Manager. To perform my duties and carry out the responsibilities; I have travelled more than 40 Resort Islands and above 45 inhabited islands across the country. During my career, I personally experienced and felt the difficulties of banking by resort workers and local island natives. Though implementation of Mobile banking system in Maldives will undoubted fully Increase economic efficiency and promote social welfare of nation as a whole CONCLUSION The Maldives may be one of the most difficult countries in the world in which to deliver financial services through traditional branch networks. The country occupies 90,000 square kilometres, 99.5% of water. Its 2, 98,968 people live on 198 scattered islands in 26 atolls, and 60% of the inhabited islands have less than 1,000 residents. Given the highly literate population and high coverage of the mobile phone network, there is great potential to use technology to overcome the barriers of geography, low population density and a small population, and deliver financial service at low cost across the country.

Islamic Banking Resistance to Securization

Islamic Banking Resistance to Securization Islamic Compliant ABSTRACT Receivables securitization is a vital financial instrument which has faced some resistance in the Islamic world with the exception of Malaysia with the result that its role in Islamic finance is as yet underdeveloped. The reasons behind this resistance are relatively ambiguous, and have not been thoroughly explored, as the existing Islamic literature offers only touches on the topic on a superficial level. This study traces the roots of the concerns of Islamic academics, opens them up to thorough discussion and proposes an objective way forward. While this study identifies three justifications behind the Islamic resistance to receivables securitization that relate to fiat money, gharar (risk), and usury, it could be argued that the key issue driving these objections is a misapplication of the Islamic rules governing gold and silver to fiat money. There is, however, a strong basis for arguing that fiat money is merely a ‘legal commodity and should be regulated by the Islamic commodity rules, removing the obstacle to the use of receivable securitization. Concerns regarding gharar (risk) and interest are valid but can be safely managed by developing an ethics-based form of securitization that protects against such risks as gambling or inability to deliver. In addition, securitization transactions could be structured on usury-free models. Finally, an attention should be drawn to the methodology used by Islamic intellectuals to apply Islamic rules to contemporary concepts. Methodologies need to be re-examined to ensure that they are true to the spirit of Islamic teaching. Introduction While it is still a relatively new concept, securitization has become a vital and effective instrument for raising funds, boosting liquidity, managing risk and allocating capital efficiently. Nevertheless, in a world where consumption has become a way of life and gambling has been raised to the status of a profession or an art form, securitization poses a silent but real threat to economies. The question has been raised as to whether or not securitization has played a role in the recent financial crisis.[1] It is argued that securitization encourages excessive borrowing, limits oversight by lenders and encourages dependence by borrowers, as well as creating what some call the illusion of liquidity.[2] Undoubtedly, the provision of loans and securitization facilitates the realization of individuals goals and creates investment opportunities. But due to the sensitivity of these tools, a disciplined and ethical environment is needed in order to protect against their misuse. This is, according to Hugo Bouleau, what is offered by the principles of Islamic finance[3]; indeed, Islam provides a comprehensive ethical way of life including commerce and investment. Islamic financial system solidly links between real assets, profits and risks. A financial transaction which does not provide these linkages may fail in the Shariah compliance test. However, assessing compliance is not always as simple as it may appear. While the foundations of the Islamic financial system were laid centuries ago, there are still divergences in scholar views concerning details, which has created serious challenges and generated debate in terms of identifying and understanding the gaps in applying the foundations of Islamic Shariah on the contemporary concepts. This has slowed the process of formulating a definite Islamic regulatory framework for financial industry particularly in a purely capitalist world. As one the most debatable issues under Islamic law; this study focuses on the Islamic regulatory framework of receivable securitization which is acknowledged by Shariah scholars and Islamic finance professionals as very important instrument, but at the same time as a critical and sensitive field. The framework of Shariah compliant receivable securitization is not yet firmly established due to the novelty of many economic and financial concepts, the lack of the Shariah scholars consensus on understanding and accommodating contemporary aspects, and, arguably, the expanded application of sadd al-dharai approach which, generally, means banning any permissible activity if it might lead to impressible result, contrary to the Shariah maxim the norm in regards transactions is that of permissibility which simply means that, any transaction, in principal, is permissible until a contradiction to Shariah is proven. This dilemma has given rise to two major directions of thought with regard to an Islamic perspective on receivable securitization; one is originated in Malaysia and the other, generally speaking, representing the rest of the Islamic world. As a result of these factors, receivable securitization is less developed in Islamic financial markets than in the conventional. In fact, individuals or institutions who seek to comply with Shariah rules can find themselves lost in a maze of contradicting views and fatwas (considered opinions of Shariah scholars). In response to this reality, this study provides an analytical examination of the status of Shariah compliant receivable securitization for the sake of identifying the roots of the gaps and challenges. After all, it is not a study specializing in Shariah but an academic and professional tracing, using a simple problem solving technique, of the realistic causes behind challenging receivable securitization under Islamic law. It is a vital step for a clear understanding of the problem toward proposing a rational way forward. The study addresses these issues in three chapters. Chapter One, An introductory platform, establishes the significance of the research topic, reviews the existing literature and demonstrates the value added by this study. Chapter Two, General Background and key underlying concepts, provides an introduction to the concepts of receivable securitization as well as the Islamic financial system in order to assist the reader in engaging with the ideas presented. Chapter Three, the Islamic regulatory framework for receivable securitization, provides a conceptual introduction to Shariah compliant securitization, and examines the roots of causes that behind challenging of the receivables securitization under Islamic law, where Chapter Four, Proposal for a way forward, provides a global proposal for embracing an ethical and disciplined Islamic compliant receivables securitization. Finally, the Conclusion summarizes the overall inputs and outputs of the study including its question and results. Chapter One: AN INTRODUCTORY PLATFORM 1.1 Why it matters Globalization is inescapable. The faiths, cultures and nations of the world are being gathered together into a single economy and trade pool. Despite the diversity of identities, economies are compelled to meet around the global table. At the end, the wisest strategy for any ideological group is to find a way to accommodate international developments while remaining true to its principles and convictions. Islam is the second largest religion of the world, with its followers estimated at 21% of the worlds population.[4] Muslim communities in historically non Muslim countries are growing rapidly. For instance, a 2001 census in the UK indicated a population of 1.591 million Muslims[5]. Although the next census will be in 2011, Richard Kerbaji reported that the growth of Muslim population is 10 times faster than that of other communities within the UK.[6] Independent of radical trends, the significance of Islam as a major world religion and the impact of Muslims as a community within the global context have made Islamic considerations a top priority on political and economic agendas within the international arena. Likewise, the global Muslim community cannot afford to be passive but must rationally and objectively engage with global changes and challenges. In a lecture given in 1993, H.R.H. the Prince of Wales stressed the fact that: †¦ The Islamic and Western world can no longer afford to stand apart from a common effort to solve their common problems†¦ We have to share experiences, to explain ourselves to each other.[7] This is, indeed, the reality of where we find ourselves today. And while interaction between civilizations and national and international factors is unavoidable, fundamental beliefs and inviolable principles will continue to exist which must be understood and respected. From finance perspective, while exact s are not available, broad agreement does exist that the size of the wealth and assets and the wide range of business networks of Muslims, both in Islamic countries and in the rest of the world, is significant. The demand for financial services which comply with Islamic law can be expected to increase tremendously, particularly following the recent global recession. It is estimated that there will be about 15 20 % annual growth in the Islamic financial products, with equity fund assets climbing to US $53 billion by 2010.[8] It is clear that a direct correlation exists: whenever the demand for banking products increases, banking debts multiply. This heightens credit risk and threatens the availability of capital and liquidity. Basel II, which represents the international consensus on capital standards, embraces securitization as an effective and helpful tool in this regard.[9] However, unless Muslim intellectuals invest considerable energy in developing clear and reliable regulatory frameworks which comply with Islamic law for the newborn concepts including securitization, Islamic banks will continue to experience difficulties in the areas of liquidity and risk management, and will fail to meet the requirements for international convergence. From another angle, the recent global economic crisis has exposed the fragility of capitalist economics. According to Sam Whimster â€Å"[c]apitalism itself is without morality†¦The finance capitalism of today has some startlingly irrational features and is no longer led by those who possess the requisite moral probity†.[10] As the need for more disciplined and ethical systems becomes increasingly apparent, the potential of Islamic finance as an alternative to conventional finance is gaining attention. As a result, broader awareness is developing in the international community regarding the features of Islamic finance and securitization. Toby Birch comments that the Islamic principles established by a desert-dwelling Bedouin fourteen hundred years ago embody the timeless wisdom which holds the key to the financial crises of today.[11] The recognition of the advantages of Islamic financial systems on objective and professional terms by non Muslim experts places a serious responsibility on Muslims experts and researchers to address and resolve the internal challenges which currently impede the development of Shariah compliant products, including receivable securitization. 1.2 Literature review It could be stated that a wealth of studies on Islamic finance can be found in libraries and on the online resources. In addition, Arabic and English literature typically have many publications on securitization within its conventional sense. However, studies focussing specifically on Shariah compliant receivable securitization, and its underlying challenges, are, noticeably few. The works which have, in fact, played the greatest role in shaping the dominant Islamic view on receivable securitization, are the many working papers that have been submitted at Islamic scholarly forums and conferences, particularly the annual conferences of the International Islamic Fiqh Academy, and the Islamic Fiqh Academy of Muslim World League. For instance, at its 19th conference in April 2009, the International Islamic Fiqh Academy discussed a group of working papers specifically focussing on, or closely related to, receivable securitization. However, by and large, the structures and approach of the papers were virtually identical, which is to be expected as the authors shared the same perspective on the same issue. In terms of its significance, securitization represents one of the most important innovations in the finance sector. It is, as Leon Kendall puts it, â€Å"changing the face of American and world of finance†.[12] This view is shared by many experts in the field, who see securitization as an essential component of the modern financial system. Vinod Kothari makes an identical statement to that of Kendall, and suggests that securitization is more than funding instrument that works beyond financial limitations.[13] This admiration for securitization can be attributed to the advantages which, according to Charles Ston and Anne Zissu, provides in alleviating balance sheet pressure,[14] transferring and fragmentizing credit risk, raising capital and securing liquidity. The importance of securitization is recognized by Islamic Intellectuals. AbdulBari Mushaal points out that receivable securitization is an important instrument in that it provides lenders rapid turnaround on their capital in order to re-inject it into investment and production operations.[15] Fuad Muhaisen identifies nine advantages provided by securitization, including its role in funding and financing privatization projects.[16] Furthermore, the working papers mentioned above which were submitted at the 19th conference of International Islamic Fiqh Academy demonstrate a common acknowledgment of the importance of receivable securitization in the Islamic world. Despite the worldwide recognition of the importance of securitization, another side of it could be recognized. Lawis Ranieri describes securitization as an adventure that involves a dark side, observing that it has contributed to destabilizing the thrift system and industry.[17] This represents one factor in the argument that securitization has been a contributing factor in the global credit crash. Thrift and credit are connected while they are also key components in the greater economic system. Securitization arguably promotes excessive credit creation,[18] encourages a culture of consumerism, and has contributed to the global financial crisis. Niall Ferguson argues that the crisis was caused by the rise and fall of securitized loans.[19] While this assertion deserves consideration, it is possible that it was not securitization but the absence of the ethics that rationalize its use, which was the problem. Islamic finance principles offer a framework with the capacity to fill this void. In his book ‘Islamic Finance Standards: Solving the Global Financial Crisis, Samir Kantaji provides a practical analysis of the global crisis and suggests that Islamic principles of finance provide the ethical and disciplined environment necessary to prevent such a future financial crash.[20] While the principles of Islamic finance were established more than fourteen hundred years ago, they do offer, as implied by Hugo Bouleau, solutions to todays banking problems.[21] The question, however, is whether Shariah scholars have the flexibility to apply these principles meaningfully to contemporary financial concepts, in general, and to securitization, in particular. The dominant philosophy of Shariah scholars is sadd al-dharai (banning any permissible activity if it might lead to an impressible result). This approach has been stressed by the International Islamic Fiqh Academy in its Resolution No. 92 (9/9), issued in April 1995.[22] However, many Islamic intellectuals oppose broadening the application of sadd al-dharai. Akhtar Zaiti emphasizes the contrasting Shariah maxim, â€Å"the norm in regards transactions in that of permissibility†, and the fact that the financial principles, maxims and frameworks provided by the Quran and Sunnah are not detailed because the finance industry and human interests vary over time. She argues that Muslims should be guided by this principle of permissibility as they engage with evolving financial concepts, including securitization, except in cases which present an obvious contradiction with the Quran and Sunna.[23] Similarly, Fuad Muhaisen argues that Islam clearly identifies which activities are prohibited, leaving room for innovation and development over the course of time, and that this is how contemporary financial concepts should be approached.[24] Regardless of the argument, what is certain is that the convictions of some Shariah scholars, coupled with the rapid development of finance and economic concepts and the impossibility of accurately foreseeing all of their potential implications, impede the development of Islamic financial systems. Studies addressing Shariah compliant receivable securitization typically roam around avoidance of Riba (usury) and Gharar (Risk), issues which are subdivided into more focused points such as profit-risk share, tangible asset connection and other underlying sub-issues. However, sale of loan is considered the cornerstone of employing receivable securitization, and is the subject of vigorous debate by Islamic intellectuals. Sale of loan was a topic of discussion at the 1998 International Islamic Fiqh Academy conference. The conference concluded that the sale of loan to a third party, whether at a current or deferred price, is strictly prohibited in Islam because it leads to Riba (usury).[25] But at its 2006 conference, International Islamic Fiqh Academy demonstrated greater flexibility and determined four permissible models for sale of Loan,[26] A similar resolution was issued by Islamic Fiqh Academy of MWL at its 2002 conference stating that some sale of loan models are prohibited because they lead to riba (usury) or Gharar (risk) of the inability of delivery, accordingly, receivable securitization is prohibited.[27] It should be noticed that loan in Islam could be goods, services, usufructs or receivables (cash flow), but none of the mentioned resolutions accepted the sale or securitization of receivables. There is no consensus regarding the prohibition of sale of loan. For example, in his book ‘The theory of loan in Islamic fiqh Ahmed Al-Hajj discusses the different viewpoints supporting and opposing sale of loan and concludes that it is permissible provided that delivery of the sale (repayment of the loan) is not possible[28]. This approach has been embraced by the Malaysian Securities Commission Shariah Advisory Council since 1996 which opened the door wide to receivable securitization in this Islamic country[29], which is, according to Rashid Al-Khan, has been widely criticized by many Middle Eastern scholars.[30] Furthermore, Saiful Rosly and Mahmood Sanusi point out that trading of Islamic bond structured on a sale of loan basis in Malaysia has been found impermissible by the majority of Shariah scholars.[31] Apparently, there is a clear disagreement over the key issues involved in achieving effective Shariah compliant receivable securitization. However, this does not mean that Shariah compliant receivable securitization cannot be utilized until the dilemma is resolved. Nor does it mean that the current position of Shariah scholars is final. The possibility always exists of renegotiating the interfaces that are developed between Shariah and developing technical concepts. The literature already includes a number of publications which discuss the foundational concepts of Islamic finance and attempt to develop an Islamic framework for securitization which brings together Islamic principles and finance innovation. But gaps remain in terms of scope and approaches of studies. To put differently, the existing Islamic literature offers only a superficial and indirect exploration of the reasons for which the permissibility of receivable securitization has been challenged under Islamic law, and handles this discussion within previous immature viewpoints. 1.3 Scope and significance of the study This study provides a panoramic view of the current situation of receivable securitization within the Islamic law. It discusses the dominant Islamic intellectuals approach that banes it, and tackles the question of what are the realistic reasons of challenging receivables securitization under Islamic law. In order to add value, this study is a digging deeper into the roots of the argument. Using a simple problem solving techniques, it traces those roots to out what is, precisely, reason behind the resistance of Shariah scholar to accepting receivables securitization. Differently, this study openly discusses the issues, and it is completely built of the maxim that in principal, any transaction is permissible until a contradiction to Shariah is proven. Furthermore, the study reflects rational viewpoint regarding riba (usury) concept which has been unreasonably exaggerated over the time. Notwithstanding, this study must not be read as a revolt against any of the Islamic schools of thought or organizations, but an objective attempt to re-pull the attention to realistic causes of prohibition of receivables securitization under Islamic law. Overall, this study helps to identify areas where religious perspectives and technical practice do not yet interface with regard to receivable securitization, and spells out the reforms needed to the approach of Islamic intellectuals methodology in terms of Islamic financing in general and securitization in particular. Chapter Two: General Background and Key Underlying Concepts 2.1 Introduction In order to understand the roots of the challenges of Islamic compliant receivable securitization, this chapter highlights key aspects of securitization as created and developed by the conventional finance industry and, on the other hand, the related key aspects of Shariah and Islamic finance. 2.2 An introduction to Securitization 2.2.1 Origin of Securitization While Vinod Kothari states that securitization has a two hundred year history in Denmark and suggests that therefore Denmark should be considered its birthplace, he admits the fact that securitization as a structured finance instrument was developed in the US.[32] Indeed, credit for the innovation of securitization is due the US government which initiated the first mortgage-backed securitization transaction through the Government National Mortgage Association (GNMA) in 1970.[33] The introduction of securitization was promoted by a severe shortage of liquidity which caused by a withdrawal of traditional lenders who turned to more profitable investments.[34] However, the perception of securitization as a magic wand that could make fund and liquidity problems disappear, together with a credit crush, dramatically expanded the usage of securitization. In the years since, extensive experience and lessons have been, and are being, learned in tailoring and structuring securitization transactions. 2.2.2 Concept of Securitization Little documentation exists regarding the origin of the term ‘securitization. Lewis Ranieri claimed that this term was not a real word, and it was used for the first time by the Wall street Journal in 1977.[35] As an emerging concept, therefore, securitization does not yet have a universally accepted definition. According to Leon Kendall, securitization is a process of packaging individual loans and other debt instruments, converting the package into a security or securities, and enhancing their credit status or rating to further their sale to third-party investors.[36] While this definition describes the process of securitization, Peter Jeffrey focuses on the objective of securitization and suggests that in its simplest form it is a secured borrowing, whereby a company borrows against an asset or group of assets.[37] This is exactly what was concluded by a United Kingdom VAT Duties Tribunal in Capital One Bank (Europe) Plc v Revenue and Customs [2005] when it stated that secu ritization is â€Å"nothing more than a sophisticated means of borrowing money†.[38] From a different angle, Vinod Kothary called attention to the philosophy of securitization and pointed out that it is in its widest sense is every process that converts financial relation into a transaction. However, he defined the term asset securitization as a device of structured financing in which an entity seeks to pool together its interest in identifiable cash flows over time, transfer the same to investors either with or without the support of further collaterals, and thereby achieve the purpose of financing.[39] Securitization can be also defined as â€Å"The transformation of a loan portfolio or other assets such as property into securities that can be sold in the primary market and traded in the secondary market†.[40] Another definition that is ascribed to Ernst and Young states that securitization is: â€Å"Any transaction under which a securitization vehicle directly or indirectly acquires receivables or bears risk associated with commitments taken or activities carried out by third parties and issues in exchange securities whose return is directly linked to the risks borne†.[41] While clearly many definitions exist for the terms ‘securitization and ‘asset securitization'[42] which describe them in either the simplest or broadest terms and approach the concept from various perspectives, all concur that securitization is a process of packaging and transforming a specific bulk of assets through a special purpose vehicle(s) into marketable securities for the purpose of liquidity and/or risk management. A key point to be addressed here is that the term ‘asset securitization is commonly used to describe the process of securitizing financial claims or receivables, notwithstanding the fact that balance sheets include other types of assets that can be subject to securitization, particularly under Islamic law (i.e. lease structure). In this context, the verb securitize, according to the Concise Oxford Dictionary means to convert an asset, specially a loan, into marketable securities, typically for the purpose of raising cash.[43] This confirms the fact that other assets can be securitized but accounts receivable and loans are the most common type of securitizable assets, perhaps because they constitute the bulk of the assets of financial firms and credit institutions. 2.2.3 Structure of and Parties to Receivable Securitization Receivable securitization can be structured on a typical funded, synthetic or collateralized debt obligation (CDO) structure.[44] However, in order to avoid dispersion and complexity; the focus here will be on the typical funded structure. A typical funded structure of receivables securitization (see 1) basically involves borrowers, an originator, an issuer and investors. These form the backbone of a typical funded securitization structure; nevertheless, a credit enhancer, rating agency and an underwriter/lead manager are also considered key players for the sake of regulatory compliance and in order to introduce an attractive opportunity for the targeted investors. Borrowers: Given that receivable securitization is a process that deals with loans; borrowers are considered the cornerstone of a securitization transaction. As they are responsible for paying the underlying loans, structuring a receivable securitization must take into account their credit capability. Some regulatory frameworks may require their consent. Originator: In receivable securitization, lenders or creditors are usually the originators of a securitization transaction. The originator can be a governmental agency or any financial, credit or investment institution such as a commercial bank, investment bank or captive finance company. The role of the originator does not start only at the point of the agreement with the SPV, but begins earlier,[45] specifically, from the moment that the originator recognizes the need for, or the feasibility of, securitizing a bulk of receivables. The origination process includes many steps involving, but not limited to, planning and structuring the securitization transaction, identifying and segregating the assets, notifying the borrowers, establishing the SPV(s), concluding the consultation and services agreements and handling any mediation activities between the borrowers and the SPV. Furthermore, the originator might continue to play the role of ‘servicer, providing, among other services, customer services, payment and collection services as well as default management and collateral liquidation.[46] An issuer: The key point of the securitization process is the issuance of the securities that resulted from pooling and transforming the assets. This issuance is usually performed by an SPV, which is normally a new and independent entity established for the purpose of taking over the position of the originator as a lender or creditor in the credit relationship. In other words, once a securitization takes place, borrowers no longer have a credit relationship with the originator, but rather with the SPV. A rating agency: For a successful securitization, a good rating of the credit quality of the transaction should be secured from a very well-established rating agency. Professional rating agencies usually provide a professional evaluation of the type and quality of the underlying assets, including any related risks.[47] Credit enhancer: Credit enhancement is a very important process for attracting investors to be involved in a securitization transaction. It provides them with a certain level of protection in the event that the originator fails to meet his commitments or the cash flows for the securitized assets are insufficient to cover the projected return of the securities. Another point, which will be discussed further below, is that credit enhancement can be secured internally through guarantees provided by the originator or on the basis of the quality of the securitized assets. Having noted that, a credit enhancer appears as a party in a securitization structure only if the credit enhancement is provided by a third party enhancer (i.e. by a letter of credit). In such a case, the enhancer must have a high credit rating in order to secure the confidence of the investors. Underwriter / lead manager: The offering of the issued securities public or to private investors is usually handled by a professional firm, typically, a bank which plays the role of underwriter in the securitization process. The key role of the underwriter is to manage the process of selling the securities to investors in order to achieve the securitizations targets. It should be noted that the trend among financial professionals today is to call this party a ‘lead manager, rather than an ‘underwriter, because the guarantee provided is, in principal, a commitment to make every effort to ensure that the securities are sold. There is, however, no guarantee in terms of the prices and quantity of the securities sold.[48] Investors: The ultimate objective of the securitization process is to transfer risk to investors and/or to generate liquidity from them. A securitization transaction may target specific kinds of investors through a private placement process or open it to the public. In both cases, the key investors are usually fund managers, pension funds, governmental funds, commercial banks and insurance companies.[49] 2.2.4 Process of Securitization It goes without saying that the securitization process involves detailed, complex and overlapping steps. In this paper, however, the focus is on the key steps which have strong significance in terms of the research objectives, namely, the packaging and transferring of the underlying receivables as well as the issuance of securities. 2.2.4.1 Packaging the Underlying Receivables The most vital step in a securitization transaction is packaging the underlying assets. This begins with identifying the targeted receivables, which may include any assets that generate cash flows over a period of time, such as mortgages, credit cards loans, consumers loans, corporate loans, auto loans, s Islamic Banking Resistance to Securization Islamic Banking Resistance to Securization Islamic Compliant ABSTRACT Receivables securitization is a vital financial instrument which has faced some resistance in the Islamic world with the exception of Malaysia with the result that its role in Islamic finance is as yet underdeveloped. The reasons behind this resistance are relatively ambiguous, and have not been thoroughly explored, as the existing Islamic literature offers only touches on the topic on a superficial level. This study traces the roots of the concerns of Islamic academics, opens them up to thorough discussion and proposes an objective way forward. While this study identifies three justifications behind the Islamic resistance to receivables securitization that relate to fiat money, gharar (risk), and usury, it could be argued that the key issue driving these objections is a misapplication of the Islamic rules governing gold and silver to fiat money. There is, however, a strong basis for arguing that fiat money is merely a ‘legal commodity and should be regulated by the Islamic commodity rules, removing the obstacle to the use of receivable securitization. Concerns regarding gharar (risk) and interest are valid but can be safely managed by developing an ethics-based form of securitization that protects against such risks as gambling or inability to deliver. In addition, securitization transactions could be structured on usury-free models. Finally, an attention should be drawn to the methodology used by Islamic intellectuals to apply Islamic rules to contemporary concepts. Methodologies need to be re-examined to ensure that they are true to the spirit of Islamic teaching. Introduction While it is still a relatively new concept, securitization has become a vital and effective instrument for raising funds, boosting liquidity, managing risk and allocating capital efficiently. Nevertheless, in a world where consumption has become a way of life and gambling has been raised to the status of a profession or an art form, securitization poses a silent but real threat to economies. The question has been raised as to whether or not securitization has played a role in the recent financial crisis.[1] It is argued that securitization encourages excessive borrowing, limits oversight by lenders and encourages dependence by borrowers, as well as creating what some call the illusion of liquidity.[2] Undoubtedly, the provision of loans and securitization facilitates the realization of individuals goals and creates investment opportunities. But due to the sensitivity of these tools, a disciplined and ethical environment is needed in order to protect against their misuse. This is, according to Hugo Bouleau, what is offered by the principles of Islamic finance[3]; indeed, Islam provides a comprehensive ethical way of life including commerce and investment. Islamic financial system solidly links between real assets, profits and risks. A financial transaction which does not provide these linkages may fail in the Shariah compliance test. However, assessing compliance is not always as simple as it may appear. While the foundations of the Islamic financial system were laid centuries ago, there are still divergences in scholar views concerning details, which has created serious challenges and generated debate in terms of identifying and understanding the gaps in applying the foundations of Islamic Shariah on the contemporary concepts. This has slowed the process of formulating a definite Islamic regulatory framework for financial industry particularly in a purely capitalist world. As one the most debatable issues under Islamic law; this study focuses on the Islamic regulatory framework of receivable securitization which is acknowledged by Shariah scholars and Islamic finance professionals as very important instrument, but at the same time as a critical and sensitive field. The framework of Shariah compliant receivable securitization is not yet firmly established due to the novelty of many economic and financial concepts, the lack of the Shariah scholars consensus on understanding and accommodating contemporary aspects, and, arguably, the expanded application of sadd al-dharai approach which, generally, means banning any permissible activity if it might lead to impressible result, contrary to the Shariah maxim the norm in regards transactions is that of permissibility which simply means that, any transaction, in principal, is permissible until a contradiction to Shariah is proven. This dilemma has given rise to two major directions of thought with regard to an Islamic perspective on receivable securitization; one is originated in Malaysia and the other, generally speaking, representing the rest of the Islamic world. As a result of these factors, receivable securitization is less developed in Islamic financial markets than in the conventional. In fact, individuals or institutions who seek to comply with Shariah rules can find themselves lost in a maze of contradicting views and fatwas (considered opinions of Shariah scholars). In response to this reality, this study provides an analytical examination of the status of Shariah compliant receivable securitization for the sake of identifying the roots of the gaps and challenges. After all, it is not a study specializing in Shariah but an academic and professional tracing, using a simple problem solving technique, of the realistic causes behind challenging receivable securitization under Islamic law. It is a vital step for a clear understanding of the problem toward proposing a rational way forward. The study addresses these issues in three chapters. Chapter One, An introductory platform, establishes the significance of the research topic, reviews the existing literature and demonstrates the value added by this study. Chapter Two, General Background and key underlying concepts, provides an introduction to the concepts of receivable securitization as well as the Islamic financial system in order to assist the reader in engaging with the ideas presented. Chapter Three, the Islamic regulatory framework for receivable securitization, provides a conceptual introduction to Shariah compliant securitization, and examines the roots of causes that behind challenging of the receivables securitization under Islamic law, where Chapter Four, Proposal for a way forward, provides a global proposal for embracing an ethical and disciplined Islamic compliant receivables securitization. Finally, the Conclusion summarizes the overall inputs and outputs of the study including its question and results. Chapter One: AN INTRODUCTORY PLATFORM 1.1 Why it matters Globalization is inescapable. The faiths, cultures and nations of the world are being gathered together into a single economy and trade pool. Despite the diversity of identities, economies are compelled to meet around the global table. At the end, the wisest strategy for any ideological group is to find a way to accommodate international developments while remaining true to its principles and convictions. Islam is the second largest religion of the world, with its followers estimated at 21% of the worlds population.[4] Muslim communities in historically non Muslim countries are growing rapidly. For instance, a 2001 census in the UK indicated a population of 1.591 million Muslims[5]. Although the next census will be in 2011, Richard Kerbaji reported that the growth of Muslim population is 10 times faster than that of other communities within the UK.[6] Independent of radical trends, the significance of Islam as a major world religion and the impact of Muslims as a community within the global context have made Islamic considerations a top priority on political and economic agendas within the international arena. Likewise, the global Muslim community cannot afford to be passive but must rationally and objectively engage with global changes and challenges. In a lecture given in 1993, H.R.H. the Prince of Wales stressed the fact that: †¦ The Islamic and Western world can no longer afford to stand apart from a common effort to solve their common problems†¦ We have to share experiences, to explain ourselves to each other.[7] This is, indeed, the reality of where we find ourselves today. And while interaction between civilizations and national and international factors is unavoidable, fundamental beliefs and inviolable principles will continue to exist which must be understood and respected. From finance perspective, while exact s are not available, broad agreement does exist that the size of the wealth and assets and the wide range of business networks of Muslims, both in Islamic countries and in the rest of the world, is significant. The demand for financial services which comply with Islamic law can be expected to increase tremendously, particularly following the recent global recession. It is estimated that there will be about 15 20 % annual growth in the Islamic financial products, with equity fund assets climbing to US $53 billion by 2010.[8] It is clear that a direct correlation exists: whenever the demand for banking products increases, banking debts multiply. This heightens credit risk and threatens the availability of capital and liquidity. Basel II, which represents the international consensus on capital standards, embraces securitization as an effective and helpful tool in this regard.[9] However, unless Muslim intellectuals invest considerable energy in developing clear and reliable regulatory frameworks which comply with Islamic law for the newborn concepts including securitization, Islamic banks will continue to experience difficulties in the areas of liquidity and risk management, and will fail to meet the requirements for international convergence. From another angle, the recent global economic crisis has exposed the fragility of capitalist economics. According to Sam Whimster â€Å"[c]apitalism itself is without morality†¦The finance capitalism of today has some startlingly irrational features and is no longer led by those who possess the requisite moral probity†.[10] As the need for more disciplined and ethical systems becomes increasingly apparent, the potential of Islamic finance as an alternative to conventional finance is gaining attention. As a result, broader awareness is developing in the international community regarding the features of Islamic finance and securitization. Toby Birch comments that the Islamic principles established by a desert-dwelling Bedouin fourteen hundred years ago embody the timeless wisdom which holds the key to the financial crises of today.[11] The recognition of the advantages of Islamic financial systems on objective and professional terms by non Muslim experts places a serious responsibility on Muslims experts and researchers to address and resolve the internal challenges which currently impede the development of Shariah compliant products, including receivable securitization. 1.2 Literature review It could be stated that a wealth of studies on Islamic finance can be found in libraries and on the online resources. In addition, Arabic and English literature typically have many publications on securitization within its conventional sense. However, studies focussing specifically on Shariah compliant receivable securitization, and its underlying challenges, are, noticeably few. The works which have, in fact, played the greatest role in shaping the dominant Islamic view on receivable securitization, are the many working papers that have been submitted at Islamic scholarly forums and conferences, particularly the annual conferences of the International Islamic Fiqh Academy, and the Islamic Fiqh Academy of Muslim World League. For instance, at its 19th conference in April 2009, the International Islamic Fiqh Academy discussed a group of working papers specifically focussing on, or closely related to, receivable securitization. However, by and large, the structures and approach of the papers were virtually identical, which is to be expected as the authors shared the same perspective on the same issue. In terms of its significance, securitization represents one of the most important innovations in the finance sector. It is, as Leon Kendall puts it, â€Å"changing the face of American and world of finance†.[12] This view is shared by many experts in the field, who see securitization as an essential component of the modern financial system. Vinod Kothari makes an identical statement to that of Kendall, and suggests that securitization is more than funding instrument that works beyond financial limitations.[13] This admiration for securitization can be attributed to the advantages which, according to Charles Ston and Anne Zissu, provides in alleviating balance sheet pressure,[14] transferring and fragmentizing credit risk, raising capital and securing liquidity. The importance of securitization is recognized by Islamic Intellectuals. AbdulBari Mushaal points out that receivable securitization is an important instrument in that it provides lenders rapid turnaround on their capital in order to re-inject it into investment and production operations.[15] Fuad Muhaisen identifies nine advantages provided by securitization, including its role in funding and financing privatization projects.[16] Furthermore, the working papers mentioned above which were submitted at the 19th conference of International Islamic Fiqh Academy demonstrate a common acknowledgment of the importance of receivable securitization in the Islamic world. Despite the worldwide recognition of the importance of securitization, another side of it could be recognized. Lawis Ranieri describes securitization as an adventure that involves a dark side, observing that it has contributed to destabilizing the thrift system and industry.[17] This represents one factor in the argument that securitization has been a contributing factor in the global credit crash. Thrift and credit are connected while they are also key components in the greater economic system. Securitization arguably promotes excessive credit creation,[18] encourages a culture of consumerism, and has contributed to the global financial crisis. Niall Ferguson argues that the crisis was caused by the rise and fall of securitized loans.[19] While this assertion deserves consideration, it is possible that it was not securitization but the absence of the ethics that rationalize its use, which was the problem. Islamic finance principles offer a framework with the capacity to fill this void. In his book ‘Islamic Finance Standards: Solving the Global Financial Crisis, Samir Kantaji provides a practical analysis of the global crisis and suggests that Islamic principles of finance provide the ethical and disciplined environment necessary to prevent such a future financial crash.[20] While the principles of Islamic finance were established more than fourteen hundred years ago, they do offer, as implied by Hugo Bouleau, solutions to todays banking problems.[21] The question, however, is whether Shariah scholars have the flexibility to apply these principles meaningfully to contemporary financial concepts, in general, and to securitization, in particular. The dominant philosophy of Shariah scholars is sadd al-dharai (banning any permissible activity if it might lead to an impressible result). This approach has been stressed by the International Islamic Fiqh Academy in its Resolution No. 92 (9/9), issued in April 1995.[22] However, many Islamic intellectuals oppose broadening the application of sadd al-dharai. Akhtar Zaiti emphasizes the contrasting Shariah maxim, â€Å"the norm in regards transactions in that of permissibility†, and the fact that the financial principles, maxims and frameworks provided by the Quran and Sunnah are not detailed because the finance industry and human interests vary over time. She argues that Muslims should be guided by this principle of permissibility as they engage with evolving financial concepts, including securitization, except in cases which present an obvious contradiction with the Quran and Sunna.[23] Similarly, Fuad Muhaisen argues that Islam clearly identifies which activities are prohibited, leaving room for innovation and development over the course of time, and that this is how contemporary financial concepts should be approached.[24] Regardless of the argument, what is certain is that the convictions of some Shariah scholars, coupled with the rapid development of finance and economic concepts and the impossibility of accurately foreseeing all of their potential implications, impede the development of Islamic financial systems. Studies addressing Shariah compliant receivable securitization typically roam around avoidance of Riba (usury) and Gharar (Risk), issues which are subdivided into more focused points such as profit-risk share, tangible asset connection and other underlying sub-issues. However, sale of loan is considered the cornerstone of employing receivable securitization, and is the subject of vigorous debate by Islamic intellectuals. Sale of loan was a topic of discussion at the 1998 International Islamic Fiqh Academy conference. The conference concluded that the sale of loan to a third party, whether at a current or deferred price, is strictly prohibited in Islam because it leads to Riba (usury).[25] But at its 2006 conference, International Islamic Fiqh Academy demonstrated greater flexibility and determined four permissible models for sale of Loan,[26] A similar resolution was issued by Islamic Fiqh Academy of MWL at its 2002 conference stating that some sale of loan models are prohibited because they lead to riba (usury) or Gharar (risk) of the inability of delivery, accordingly, receivable securitization is prohibited.[27] It should be noticed that loan in Islam could be goods, services, usufructs or receivables (cash flow), but none of the mentioned resolutions accepted the sale or securitization of receivables. There is no consensus regarding the prohibition of sale of loan. For example, in his book ‘The theory of loan in Islamic fiqh Ahmed Al-Hajj discusses the different viewpoints supporting and opposing sale of loan and concludes that it is permissible provided that delivery of the sale (repayment of the loan) is not possible[28]. This approach has been embraced by the Malaysian Securities Commission Shariah Advisory Council since 1996 which opened the door wide to receivable securitization in this Islamic country[29], which is, according to Rashid Al-Khan, has been widely criticized by many Middle Eastern scholars.[30] Furthermore, Saiful Rosly and Mahmood Sanusi point out that trading of Islamic bond structured on a sale of loan basis in Malaysia has been found impermissible by the majority of Shariah scholars.[31] Apparently, there is a clear disagreement over the key issues involved in achieving effective Shariah compliant receivable securitization. However, this does not mean that Shariah compliant receivable securitization cannot be utilized until the dilemma is resolved. Nor does it mean that the current position of Shariah scholars is final. The possibility always exists of renegotiating the interfaces that are developed between Shariah and developing technical concepts. The literature already includes a number of publications which discuss the foundational concepts of Islamic finance and attempt to develop an Islamic framework for securitization which brings together Islamic principles and finance innovation. But gaps remain in terms of scope and approaches of studies. To put differently, the existing Islamic literature offers only a superficial and indirect exploration of the reasons for which the permissibility of receivable securitization has been challenged under Islamic law, and handles this discussion within previous immature viewpoints. 1.3 Scope and significance of the study This study provides a panoramic view of the current situation of receivable securitization within the Islamic law. It discusses the dominant Islamic intellectuals approach that banes it, and tackles the question of what are the realistic reasons of challenging receivables securitization under Islamic law. In order to add value, this study is a digging deeper into the roots of the argument. Using a simple problem solving techniques, it traces those roots to out what is, precisely, reason behind the resistance of Shariah scholar to accepting receivables securitization. Differently, this study openly discusses the issues, and it is completely built of the maxim that in principal, any transaction is permissible until a contradiction to Shariah is proven. Furthermore, the study reflects rational viewpoint regarding riba (usury) concept which has been unreasonably exaggerated over the time. Notwithstanding, this study must not be read as a revolt against any of the Islamic schools of thought or organizations, but an objective attempt to re-pull the attention to realistic causes of prohibition of receivables securitization under Islamic law. Overall, this study helps to identify areas where religious perspectives and technical practice do not yet interface with regard to receivable securitization, and spells out the reforms needed to the approach of Islamic intellectuals methodology in terms of Islamic financing in general and securitization in particular. Chapter Two: General Background and Key Underlying Concepts 2.1 Introduction In order to understand the roots of the challenges of Islamic compliant receivable securitization, this chapter highlights key aspects of securitization as created and developed by the conventional finance industry and, on the other hand, the related key aspects of Shariah and Islamic finance. 2.2 An introduction to Securitization 2.2.1 Origin of Securitization While Vinod Kothari states that securitization has a two hundred year history in Denmark and suggests that therefore Denmark should be considered its birthplace, he admits the fact that securitization as a structured finance instrument was developed in the US.[32] Indeed, credit for the innovation of securitization is due the US government which initiated the first mortgage-backed securitization transaction through the Government National Mortgage Association (GNMA) in 1970.[33] The introduction of securitization was promoted by a severe shortage of liquidity which caused by a withdrawal of traditional lenders who turned to more profitable investments.[34] However, the perception of securitization as a magic wand that could make fund and liquidity problems disappear, together with a credit crush, dramatically expanded the usage of securitization. In the years since, extensive experience and lessons have been, and are being, learned in tailoring and structuring securitization transactions. 2.2.2 Concept of Securitization Little documentation exists regarding the origin of the term ‘securitization. Lewis Ranieri claimed that this term was not a real word, and it was used for the first time by the Wall street Journal in 1977.[35] As an emerging concept, therefore, securitization does not yet have a universally accepted definition. According to Leon Kendall, securitization is a process of packaging individual loans and other debt instruments, converting the package into a security or securities, and enhancing their credit status or rating to further their sale to third-party investors.[36] While this definition describes the process of securitization, Peter Jeffrey focuses on the objective of securitization and suggests that in its simplest form it is a secured borrowing, whereby a company borrows against an asset or group of assets.[37] This is exactly what was concluded by a United Kingdom VAT Duties Tribunal in Capital One Bank (Europe) Plc v Revenue and Customs [2005] when it stated that secu ritization is â€Å"nothing more than a sophisticated means of borrowing money†.[38] From a different angle, Vinod Kothary called attention to the philosophy of securitization and pointed out that it is in its widest sense is every process that converts financial relation into a transaction. However, he defined the term asset securitization as a device of structured financing in which an entity seeks to pool together its interest in identifiable cash flows over time, transfer the same to investors either with or without the support of further collaterals, and thereby achieve the purpose of financing.[39] Securitization can be also defined as â€Å"The transformation of a loan portfolio or other assets such as property into securities that can be sold in the primary market and traded in the secondary market†.[40] Another definition that is ascribed to Ernst and Young states that securitization is: â€Å"Any transaction under which a securitization vehicle directly or indirectly acquires receivables or bears risk associated with commitments taken or activities carried out by third parties and issues in exchange securities whose return is directly linked to the risks borne†.[41] While clearly many definitions exist for the terms ‘securitization and ‘asset securitization'[42] which describe them in either the simplest or broadest terms and approach the concept from various perspectives, all concur that securitization is a process of packaging and transforming a specific bulk of assets through a special purpose vehicle(s) into marketable securities for the purpose of liquidity and/or risk management. A key point to be addressed here is that the term ‘asset securitization is commonly used to describe the process of securitizing financial claims or receivables, notwithstanding the fact that balance sheets include other types of assets that can be subject to securitization, particularly under Islamic law (i.e. lease structure). In this context, the verb securitize, according to the Concise Oxford Dictionary means to convert an asset, specially a loan, into marketable securities, typically for the purpose of raising cash.[43] This confirms the fact that other assets can be securitized but accounts receivable and loans are the most common type of securitizable assets, perhaps because they constitute the bulk of the assets of financial firms and credit institutions. 2.2.3 Structure of and Parties to Receivable Securitization Receivable securitization can be structured on a typical funded, synthetic or collateralized debt obligation (CDO) structure.[44] However, in order to avoid dispersion and complexity; the focus here will be on the typical funded structure. A typical funded structure of receivables securitization (see 1) basically involves borrowers, an originator, an issuer and investors. These form the backbone of a typical funded securitization structure; nevertheless, a credit enhancer, rating agency and an underwriter/lead manager are also considered key players for the sake of regulatory compliance and in order to introduce an attractive opportunity for the targeted investors. Borrowers: Given that receivable securitization is a process that deals with loans; borrowers are considered the cornerstone of a securitization transaction. As they are responsible for paying the underlying loans, structuring a receivable securitization must take into account their credit capability. Some regulatory frameworks may require their consent. Originator: In receivable securitization, lenders or creditors are usually the originators of a securitization transaction. The originator can be a governmental agency or any financial, credit or investment institution such as a commercial bank, investment bank or captive finance company. The role of the originator does not start only at the point of the agreement with the SPV, but begins earlier,[45] specifically, from the moment that the originator recognizes the need for, or the feasibility of, securitizing a bulk of receivables. The origination process includes many steps involving, but not limited to, planning and structuring the securitization transaction, identifying and segregating the assets, notifying the borrowers, establishing the SPV(s), concluding the consultation and services agreements and handling any mediation activities between the borrowers and the SPV. Furthermore, the originator might continue to play the role of ‘servicer, providing, among other services, customer services, payment and collection services as well as default management and collateral liquidation.[46] An issuer: The key point of the securitization process is the issuance of the securities that resulted from pooling and transforming the assets. This issuance is usually performed by an SPV, which is normally a new and independent entity established for the purpose of taking over the position of the originator as a lender or creditor in the credit relationship. In other words, once a securitization takes place, borrowers no longer have a credit relationship with the originator, but rather with the SPV. A rating agency: For a successful securitization, a good rating of the credit quality of the transaction should be secured from a very well-established rating agency. Professional rating agencies usually provide a professional evaluation of the type and quality of the underlying assets, including any related risks.[47] Credit enhancer: Credit enhancement is a very important process for attracting investors to be involved in a securitization transaction. It provides them with a certain level of protection in the event that the originator fails to meet his commitments or the cash flows for the securitized assets are insufficient to cover the projected return of the securities. Another point, which will be discussed further below, is that credit enhancement can be secured internally through guarantees provided by the originator or on the basis of the quality of the securitized assets. Having noted that, a credit enhancer appears as a party in a securitization structure only if the credit enhancement is provided by a third party enhancer (i.e. by a letter of credit). In such a case, the enhancer must have a high credit rating in order to secure the confidence of the investors. Underwriter / lead manager: The offering of the issued securities public or to private investors is usually handled by a professional firm, typically, a bank which plays the role of underwriter in the securitization process. The key role of the underwriter is to manage the process of selling the securities to investors in order to achieve the securitizations targets. It should be noted that the trend among financial professionals today is to call this party a ‘lead manager, rather than an ‘underwriter, because the guarantee provided is, in principal, a commitment to make every effort to ensure that the securities are sold. There is, however, no guarantee in terms of the prices and quantity of the securities sold.[48] Investors: The ultimate objective of the securitization process is to transfer risk to investors and/or to generate liquidity from them. A securitization transaction may target specific kinds of investors through a private placement process or open it to the public. In both cases, the key investors are usually fund managers, pension funds, governmental funds, commercial banks and insurance companies.[49] 2.2.4 Process of Securitization It goes without saying that the securitization process involves detailed, complex and overlapping steps. In this paper, however, the focus is on the key steps which have strong significance in terms of the research objectives, namely, the packaging and transferring of the underlying receivables as well as the issuance of securities. 2.2.4.1 Packaging the Underlying Receivables The most vital step in a securitization transaction is packaging the underlying assets. This begins with identifying the targeted receivables, which may include any assets that generate cash flows over a period of time, such as mortgages, credit cards loans, consumers loans, corporate loans, auto loans, s