Islam Guidelines

Theists only.

This forum is a debate area to discuss issues pertaining to Islam. This forum is generally for theists only, and is not the area for debate between atheists and theists. Non-theist may not post here without first obtaining permission from the moderator of this forum. Granting of such permission is subject to Moderator discretion - and may be revoked if the Moderator feels that the poster is not keeping with the spirit of the World Religions Department.

Atheists are welcome to discuss and debate these issues in the Apologetics 301 forum without such restrictions.

Forum Rules: Here
See more
See less

Islamic economics

  • Filter
  • Time
  • Show
Clear All
new posts

  • Islamic economics

    The term "Islamic" for Islamic economics may be slightly problematic as most of the ethical underpinnings of the system also matches that of Judaism and Christianity and there were contributions to this civilization (and its systems) from other civilizations such as the Chinese, Indians, Egyptians Persians, Byzantine, Greco-Roman...etc ...Nevertheless, for Muslims, the basic principles can be traced back to the Quran and to the methodology developed in the Sharia.

    The Modern Islamic banking and finance industries are still young and there is much diversity of thought and ongoing debates on various issues.....

    here is one opinion at the history of Islamic economics:-

  • #2
    Islamic economics (commerce) as a system refers to 2 major aspects---the generation of wealth and the distribution of wealth.
    But---it is not quite capitalist, or socialist, or marxist...its an alternate system.

    To fit such an alternate system onto the Modern economics/finance, banking system requires some ingenuity. There are discussions on how this should be done.....A person who has worked in the finance and banking industry has this opinion



    • #3
      finance is one aspect of an economic system ---but it has generated much interest so here is some info:-

      The most critical and significant implication of banning interest is the indirect prohibition of a “pure” debt security. The key point to bear in mind is that Islamic law doesn’t recognize money and money instruments as a commodity but merely as a medium of exchange. Hence any return must be tied to an asset, or participation and risk-taking in a joint enterprise (such as partnerships). A pure debt security is replaced with an “asset-linked” security, direct financing of a real asset, and different forms of partnerships of which equity financing is the most desirable.

      In addition to prohibition of riba, there are several other important provisions which may affect financial transactions. These include the prohibition of ‘gharar’ (uncertainty or asymmetrical information), ‘maysir’ (gambling, speculation), hoarding, as well as trading in prohibited commodities..."


      Basic instruments include: cost-plus financing (murabaha), profit-sharing (mudaraba), leasing (ijara), partnership (musharaka) and forward sale (bay’salam). These constitute the basic building blocks for developing a wide array of more complex financial instruments.

      Murabaha – Trade with markup or cost-plus sale. The purchase of an asset is financed for a profit margin, with the asset purchased on behalf of client and resold at a pre-determined price. Payment could be in lump sum or in installments and ownership of the asset remains with bank till full payments are made

      Ijara – Operational or financial leasing contracts. Bank purchases asset on behalf of client and allows usage of asset for a fixed rental payment. Ownership of the asset remains with the financier but may gradually transfer to the client who eventually becomes the owner (ijara wa iqtina).

      Mudaraba – Trustee financing contract. One party contributes capital while the other contributes effort or expertise. Profits are shared according to a predetermined ratio and the investor is not guaranteed a return and bears any financial loss.

      Musharaka – Equity participation contract. Different parties contribute capital and profits are shared according to a pre-determined ratio, not necessarily in relation to contributions, but losses are shared in proportion to capital contributions. The equity partners share and control how the investment is managed and each partner is liable for the actions of the others.

      Sales contracts. Deferred-payment sale (bay’ mu’ajjal) and deferred-delivery sale (bay’salam) contracts, in addition to spot sales, are used for conducting credit sales. In a deferred-payment sale, delivery of the product is taken on the spot, but delivery of the payment is delayed for an agreed period. Payment can be made in a lump sum or in installments, provided there is no extra charge for the delay. A deferred-delivery sale is similar to a forward contract where delivery of the product is in the future in exchange for payment on the spot market.

      Sukuk – Certificates of Ownership. Sukuk are certificates of equal value representing undivided shares in ownership of tangible assets, usufruct and services, or (in the ownership of) the assets of particular projects. The returns on the certificates are directly linked to the returns generated by the underlying assets.


      • #4
        for comparision of conventional systems and Islamic systems Thorsten Beck (formerly of the World Bank) has done some studies. His and others who have looked at this have concluded that since the Islamic system is asset-based it fares better under stress conditions....
        IMO, the conventional system may be "too big to fail" requiring taxpayer bailouts but the Islamic system is "too good to fail" requiring no bailouts.....
        (....however, there are still problems that need to be ironed out.....)

        here is another opinion:-


        • #5
          Compliments on your complimentary points to our main economic discussion.


          Related Threads


          Topics Statistics Last Post
          Started by rogue06, 11-13-2020, 09:15 AM
          44 responses
          Last Post siam
          by siam
          Started by Christian3, 10-25-2020, 07:17 AM
          8 responses
          Last Post Trucker
          by Trucker
          Started by Trucker, 10-23-2020, 11:09 AM
          51 responses
          Last Post Trucker
          by Trucker
          Started by JohnnyP, 01-23-2014, 04:30 PM
          5 responses
          1 like
          Last Post Dan Zebiri