INCOHERENT PIETISM AND SHARIA ARBITRAGE

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Vying for countless billions of Arab petrodollars, unexpected champions of \"Islamic finance\" have emerged in unlikely places. Most recently, the growing list has included Gordon Brown, the UK's Chancellor of the Exchequer, and officers of the Monetary Authority of Singapore. Emerging financial centres in Bahrain, Dubai and Malaysia have grown with Islamic finance, but now the industry's size has piqued the interest of more traditional centres.

Most notable has been the growth of the market for bond-like instruments known as sukuk - the plural of sakk, an Arabic precursor of cheque, meaning certificate of debt. Other Arabic words have populated the world of Islamic finance: murabaha, ijara etc. Competition for this market niche has brought anglicised versions of those words into major conferences from New York to Singapore.

So, what is Islamic finance, really? As the name suggests, Islamic finance is first and foremost about religious identity. It first appears in the writings of the intellectual forefathers of political Islam and their students.
The simplistic economic view of these writers - paradoxically echoed to this day, not only by religious figures, but also by Western regulators - is that Islamic scripture forbids all types of interest. As I, and others, have shown in detail in academic publications, traditional religious scholarship does not support application of this simplistic view to modern finance. Indeed, the very practice of Islamic finance today is interest based.

If all interest is forbidden, then, in principle, the solution is to build all financial intermediation on equity-based profit sharing. The practical solution - which I call \"Sharia arbitrage\" - is to use legal devices to restructure interest-bearing debt, collecting interest in the form of rent or price mark-up. Designing such instruments and their certification as \"interest free\" constitutes the bulk of Islamic finance.

One of the most popular models is the sale/lease-back bond structure, known by the exotic name sukuk al-ijara. A bond issuer sells some real estate or other assets to a special purpose vehicle, which raises the funds by selling share certificates. The SPV leases the assets back to the issuer, thus collecting principal plus interest and passing them along to sukuk holders in the form of rent. At the end of the lease, the SPV sells or gives the property back to the issuer.

In a well-structured sukuk issuance, payments would continue to the sukuk holders, even if cash flow from the underlying assets were to stop. The repurchase agreement thus acts also to ensure that sukuk holders are exposed only to the issuer's credit risk. The role of religious-scholar consultants is to sustain the fiction of conducting a different type of finance, while keeping the associated transaction costs of that fiction minimal. Those structures have been popular only since 2000, and their risk structures have not yet been tested legally in bankruptcy or other proceedings.

A stalwart of Islamic banking, the buy/sell-back murabaha transaction, has endured two legal tests, in which British courts disregarded Sharia provisions and enforced English law.

Spurious sales and leases that rename interest as profit or rent are not without cost. Additional costs of these inefficient transactions are passed on to the customers. Fortunately for the customers, perhaps, but most fortunately for financial providers, regulators have been surprisingly accommodating, for instance eliminating double taxation on property-flipping murabaha (in which a bank buys a property, then sells it on credit immediately) for home finance in the UK.

The primary beneficiaries of Islamic finance are international law firms. Rising interest in an exotic legal system - one that appears to promote the use of sale/lease-back structures to disguise interest-bearing debt - was the greatest gift that one could give to skilled legal arbitrageurs who are experts in structured finance.

The second set of beneficiaries has been the premier multinational banks, who have driven Islamic financial innovation (re-engineering is a more apt description) in both investment and retail banking.

The third set of beneficiaries has been self-styled religious \"scholars\" and \"experts\", who are retained as consultants to certify the Islamicity of re-engineered financial products.

For now, \"Islamic finance\" thrives on incoherent pietism. On the one hand, its proponents justify the efficiency losses to their customers as the \"cost of being Muslim\". On the other hand, they rouse misplaced religious pride in the industry's growth, with surprisingly frequent claims that its modes are, or will become, unequivocally superior.

Most observers find contemporary Islamic finance harmless enough, drawing analogies to kosher water or organic tomatoes. However, it is symptomatic of more serious problems. The modus operandi of Islamic finance is worrisome for two reasons: it glorifies irrational adherence to outdated medieval jurisprudence, and supports the development of a separatist and boastful Islamic identity. This mixture has proven disastrous in recent years, and Muslims can hardly afford its economic price.


“伊斯兰金融”意想不到的支持者，已经出现在意想不到的地方，争抢巨额阿拉伯石油美元。最近，在这个日益增长的名单中，又增加了英国财政大臣戈登•布朗(Gordon Brown)以及新加坡金融管理局(Monetary Authority of Singapore)的官员。巴林、迪拜和马来西亚的金融中心正与伊斯兰金融一同成长，但现在，这个行业的规模激发了传统金融中心的兴趣。

最引人注目的是伊斯兰债券(sukuk)市场规模的增长。伊斯兰债券是一种类似于债券的金融工具，而Sukuk这个词是阿拉伯早期支票sakk的复数形式，意为“债务证明”。穆拉巴哈（murabaha，即成本加成融资）和伊吉拉（ijara，即租赁）等其它阿拉伯词汇，已经在伊斯兰金融中占据了一席之地。从纽约到新加坡，对这一市场领域的竞争，已经使得各类大型会议上出现了这些词汇的英文版本。

那么，伊斯兰金融到底是什么？正如其名字使人想到的，伊斯兰金融首先与宗教特性有关。它最先出现在智慧的政治伊斯兰(political Islam)先辈及其学生们的著作中。

这些作者过于简单化的经济观点是，伊斯兰教义禁止任何形式的利息。这种观点在今天依然有人响应，不仅有宗教人士，还有西方的监管机构。正如我和其他人已经在学术出版物上详细指出的那样，传统的宗教学者不支持将这种过分简化的观点应用在现代金融之中。事实上，伊斯兰金融的实际操作，正是以利息为基础的。

如果所有形式的利息都在禁止之列，那么从原则上讲，解决方案便是将所有金融中介建立在以股份为基础的利润分成之上。实际可行的解决方案——我称之为“伊斯兰教义套利”(Sharia arbitrage)——就是运用法律策略重组有利息的债务，以租金或标高价格的形式收取利息。设计此种工具，并证明它们“无利息”，组成了伊斯兰金融中的一大部分。

出售回租(Sales/lease-back)债券结构是最为流行的模式之一，它有一个充满异国情调的名字：sukuk al-ijara。一个债券发行方，将一些地产或其它资产出售给一个特殊用途工具，而这个工具则通过出售股份证明来募集资金。随后，这个特殊用途工具将这些资产回租给发行方，以此回收本金和利息，并以租金的形式返还给伊斯兰债券的持有人。在租期结束时，该工具再将这部分资产出售或转移给发行方。

在一宗安排合理的伊斯兰债券发行交易中，即便来自潜在资产的现金流即将结束，债券持有者仍将持续获得款项支付。因此，回购协议的另外一个作用，便是确保伊斯兰债券的持有者只面对发行方的信用风险。宗教学者应邀担任顾问，其作用就是支撑一个“幌子”，向外界表明这是一种不同类型的金融活动，并将这个“幌子”中的关联交易成本维持在最低水平。直到从2000年起，那些结构才开始流行起来，其风险结构在法律层面尚未经历破产或其它程序的考验。

在伊斯兰银行业中占据重要地位的出售回租穆拉巴哈交易，已经经历了两次法律方面的考验。在这两次考验中，英国法庭无视伊斯兰教法的规定，强行按照英国法律作出判决。

虚拟的销售和租赁，将利息重新命名为利润或租金，这种做法并非没有代价。这些低效交易的额外成本已被转嫁给消费者。出人意料的是，监管机构一直都很通融，这或许是消费者的运气，但主要还是金融供应商的运气。例如在英国，针对住房融资，就取消了对地产穆拉巴哈（银行购买一处地产，然后立即将其赊账出售）的双重课税。

伊斯兰金融的主要受益者，是国际律师事务所。如果某个外国的法律体系显然促进人们用出售回租结构来掩盖利息型债务，那么，这个法律体系中不断增长的利息，就是经验丰富的法律“套利者”们可能获得的最好礼物，因为他们是结构性金融方面的专家。

其次受益的是大型跨国银行。它们一直在投资和零售银行方面推动伊斯兰金融创新（更准确地说，是重新设计流程）。

第三个受益者是自封的宗教“学者”和“专家”。他们被聘为顾问，以确保重新设计的金融产品符合伊斯兰教义。

目前，“伊斯兰金融”因为参差不齐的宗教虔诚而得以繁荣发展。一方面，“伊斯兰金融”的支持者们认为，消费者的效率损失，是他们“作为穆斯林所付出的代价”。另一方面，该行业的增长唤醒了错位的宗教自豪感，人们极为频繁地宣称，他们的模式是（或者将成为）最优秀的。

多数观察人士发现，当代的伊斯兰金融是无害的，类似于符合犹太教规的纯净水或有机西红柿。然而，它是一些更严重问题的征兆。伊斯兰金融的做法令人不安，原因有二：它美化无理性地坚持过时的中世纪法律学，支持分离和自负的伊斯兰认同的发展。近年来，两者的混合已经被证明是灾难性的，穆斯林世界几乎无法承受其经济代价。