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

Case Study Diversity at Pepsi Co

MGT 3302 Case #1-Diversity at PepsiCo 1. If I were just appointed the HR manager at PepsiCo, I would implement several mandatory training sessions for the employees and board members. In order for a company to integrate a diversified culture into their organization, every single member of the company has to be involved. Several key components that would be introduced would be legal awareness, cultural awareness, and sensitivity training. Legal awareness would be a very important training component due to the overall impact it would have for the organization.This particular component deals with the legal aspect of discriminating; also what you should and should not do when it comes to dealing with people of different backgrounds. If the legal awareness training is successful, this could save the company a lot of hardship and money by preventing discrimination lawsuits. Cultural awareness would be another training component that I would implement since learning about the different cust oms is essential to understand that culture.Foreign and unknown circumstances can sometimes become awkward; this training would help the organization create a comfortable work environment. Sensitivity training would probably go hand in hand with cultural awareness, according to Mathis and Jackson (2011), â€Å"the aim here is to â€Å"sensitize† people to the differences among them and how their words and behaviors are seen by others† (p. 101). The purpose of the training would be to build empathy amongst the members of the organization towards one another. . The â€Å"diversity management approach† that PepsiCo currently utilizes is â€Å"Solve Diversity Issues and Create an Inclusive Culture†. According to Mathis and Jackson (2011), â€Å"PepsiCo also has regular diversity celebrations†¦ this inclusion of diversity issues throughout the company contributes to PepsiCo’s success with employees, managers, and customers† (p. 110). I belie ve that diversity has played a major role in PepsiCo’s financial success, the numbers are concrete evidence of it. 3.The challenges and opportunities that the new CEO will face given her gender and ethnicity would be many 4. The term â€Å"internalize† diversity refers to analyzing diversity approach beyond the financial part or the organizations. When an executive talks about the benefits of integrating diversity into their organization they should also include non-financial benefits. As the case points out, Steve Reinemund did not know how to respond when asked, how would the diversity approach be viewed if it didn’t prove to be beneficial for business.After analyzing the question and consulting it with other people , he said â€Å"and it finally occurred to me that I had spent three years talking about the business case for diversity -â€Å"the head-while never speaking about ‘the heart’† ( Thomas and Creary,2009, p. 8 ). Internalizing di versity is very important to the company’s integrity since customers will be able to see the true values and intentions of the company. Customers will be able to see that they truly want to diversify their organization for reasons beyond the financial gain.

Underrated Questions About Visual Arts Extended Essay Topics That You Need to Read About

Underrated Questions About Visual Arts Extended Essay Topics That You Need to Read About The Debate Over Visual Arts Extended Essay Topics If you want to determine what you will write about in your essay, these suggestions are what you demand. Now you are prepared to make your research question. Except for selecting a topic, researching, and pinning down the most important question, it's vital to choose the structure as a lengthy essay must be long. The intent of clarifying the terms of the test is to make certain that test accommodations aren't provided excessively or when not appropriate to the purpose or kind of test. You may get rid of focus when you go for an ambiguous topic. In the majority of cases students are confronted with a challenge of landing a topic and they're in dilemma on which topic to write on. Try out another topic and do the exact same 5-minute writing test till you locate a topic you know it is easy to write on. If you get a free subject, you have to recognize the region of your principal interest. The Upside to Visual Arts Extended Essay Topics In the majority of instances, while working on the essay, you will require someone to aid you with it. You may don't hesitate to place an order with us and more than 600 writers are waiting to aid you. It's also easier than attempting to add references at a subsequent stage. You also have the alternative of getting specialist help in case you have troubles with writing the job. An elongated essay writing is essential requirement for those students taking ib programs. Some schools will provide you with a timeline of when you must produce a topic, when you will need to meet up with your advisor and when certain drafts are due. Rather than that, you compose a paper and provide an oral presentation. If you own a research paper that has to be written, we are here to assist you. The cost of an essay depends upon the quantity of effort the writer has to exert. At the exact same time, be prepared to assume a good deal of responsibility, because writing an elongated essay is a torture rather than pleasure. The final, formal bit of writing of 3,000-4,000 words is something which students can take pride in, present to teachers, parents and perhaps even future employers. Searching for the ideal writing service is based on one leading factor on whether you will find a guarantee for the money or not. A college student who's writing this kind of essay must possess in-depth knowledge on the topic of the essay as a high degree of research is required to compose the essay. You already understand how to write a n academic essay you begin with a put the words in your voice you don't need all that challenging work to go to waste! A fantastic essay isn't written overnight. The college essay is your opportunity to tell your own story the perfect way to tell your story is to compose a personal, thoughtful essay about something which has. You select a topic that has to be accepted by IB (which is not so difficult). When the topic was approved, you should be able to draft the most important idea of your extended essay. A great history essay topic is considerably more important than you can think. Besides having an intriguing essay topic, you have to use develop it in a correct way. You might believe that it's only the cover of your essay, but it's an important component, and you need to treat it correctly. If you don't understand how to begin your essay or where to search for supporting data, we'll be pleased to help you. An excellent essay will explain a single concept in sufficient depth and make links throughout the analysis to other associated concepts. Inside my opinion, an essay with a fantastic variety of primary data that is checked against other secondary research is an excellent strategy. Below, you may also locate a list of interesting history topic suggestions which you could utilize. Make sure you are conversant with the topic. List down all of the intriguing topics that you encounter. These topics are able to help you accomplish that.

Tourism Essay on the Caribbean - 1061 Words

Caribbean Travel and Tourism (HM321) Name: Dondre Fawkes Student #: 620023009 Lecturer: Ms. Mackay Negative environmental impact of tourism in the Caribbean Coastal and Marine Resources The overall environmental effects of tourism in the Caribbean involve environmental degradation which hinders sustainability. Environmental effects related to tourism are problematic and may cause irreversible impacts. These environmental effects include urbanization, over exploitation of resources, coastal erosion, deterioration of water quality, increased pollution levels, deforestation, and the destruction of coral reefs, mangroves and sea grass beds. Many of these factors reduce the resilience of the ecosystems. Furthermore, it should†¦show more content†¦The direct and indirect impact of tourism on coastal and marine areas can be seen in the increasing conversion of coastal habitats and subsequent impacts. For example, over extraction of ground water by expanding tourism infrastructure results in the intrusion of blackish or salt water into coastal aquifers, eventually contaminating the groundwater system and coastal soil. The massive influxes of tourists, often to relatively small area within the Caribbean, have a huge impact. In many areas, massive new tourists’ developments have been built-including airports, marinas, resorts and golf courses. Overdevelopment for tourism has the same problems as other coastal developments, but often has a greater impact as the tourists’ developments are located at or near fragile marine ecosystems. For example: mangrove forests and sea grass meadows have been removed to create open beaches, tourist developments such as piers and other structures have been built directly on top of coral reefs, nesting sites for endangered marine turtles have been destroyed and disturbed by large numbers of tourists on the beaches. 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