CONCEPT ISLAMIC FINANCE AND BANKING

However in the current situation Islamic banking and finance IBF is apparently mixing up the concept of social welfare and the conventional ideology of wealth maximisation altogether due to the. Islamic finance hardly existed 30 years ago yet today is a 25 trillion industry with hundreds of specialised institutions located in more than 80 countries.

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1960s End of colonialism and independence of countries.

CONCEPT ISLAMIC FINANCE AND BANKING. Brief Modern History of Islamic Finance Interest in reviving a banking and financial system started in early 1900s. Banking in Islam is a saving money framework that depends on the standards of Islamic law additionally known as Shariah law and guided by Islamic financial matters. In the Islamic banking industry the highest regulating order and consent to indulge in any economic and financial activity would be taken from the Qu ā i passages and or verses the prophetic traditions or from the tacit approved activities of early Muslims who lived wined and dined with the prophet ﷺ.

Islamic banking is a financial system which identifies itself with the spirit of Shariah as laid down by the Holy Quran and Sunnah as regards its objectives principles practices and. مصرفية إسلامية or sharia-compliant finance is banking or financing activity that complies with sharia Islamic law and its practical application through the development of Islamic economics. Islamic banking or Islamic finance Arabic.

An Islamic financial system avoids interest and interest-based assets Hassan and Lewis 2007 offered a comprehensive description of Islamic modes of financing which are based on profit and loss sharing investment types of risks in Islamic banking and financial innovations including access to capital markets and securitization introduced by Islamic banks and thus restricts speculation Speculation. Essentially this means interest-free financing. Islamic finance is a financial system that operates according to Islamic law which is called sharia and is therefore sharia-compliant.

Among these are functions achieved by risk management devices marketable securities accounts receivable financing preferred stock and a futures market28. Islamic Finance 2014 The CFA Institute Research Foundation 3 discusses Islamic economic thought and highlights its pertinence for Islamic finance explains the major elements of Islamic law and prohibitions concerning Islamic finance addresses the use of nominate contracts and promises in structuring Islamic finance products touches on regulatory issues. The main concept of the Islamic banking is the prohibition on collection of interest and its utilization for the business purposes.

1950s Appearance of early writings about problems of conventional economic systems and how Islams principles of economics offer an alternative. And banking public finance and development economics etc. Islamic banking refers to a system of banking consonant with the basic principles of Islamic Shariah the rules and values set by Islam.

Respect for such principles allows investing and making profits in accordance with the rules of Muslim law. There is no single definition of Islamic Finance but it is widely used today to refer to financial and commercial activities that respect the principles of Islamic law and jurisprudence more commonly referred to as Shari a. Conventional banking is essentially based on debtor-creditor relationship between depositors and the bank in the one hand and between the borrowers and the bank on the interest is considered as the price of credit reflecting the opportunity cost of money.

It is recommended that the courses on Islamic economic theory and policy as well as banking and finance be offered in the final year 7 th8 semester of a 4-year bachelors degree program or equivalent. Just like conventional financial systems Islamic finance features banks capital markets fund managers investment firms and insurance companies. Theoretical Basis of the Concept of Islamic Banking.

Islamic banks are by far the biggest players in the Islamic finance industry. Hence Islamic Banking is said to be done when the internal processes procedures and financial transactions are in compliance with the rules prescribed by Quran and Hadith. To be able to survive in the market Islamic finance must find a way to perform certain functions of conventional finance if it is to compete successfully.

Islamic finance is a way of doing financial transactions and banking while respecting Islamic law or sharia.

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