Breaking News
Home / Religion / Islamic Banking

Islamic Banking

– – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – –

More ↓

Islam views life as a compact whole and does not divide it into many separate and conflicting parts. The economic aspect is one of the most important parts of our life, while not being the whole of it. The Islamic system is balanced and places everything in its right place. Islam has given detailed regulations for the conduct of our economic life, which concerns mainly the earning and use of wealth.

Man needs bread to live but he does not live for bread alone. This means that earning and spending money is essential for our living, but we do not live only for this. We have a greater purpose in life. We are Allah’s agents (Khalifah) on earth. We not only have a body but we also have a soul and a conscience. Without our soul and conscience, we would be considered little more than animals.

Everything in Islam is for the benefit and welfare of mankind. The economic principle of Islam aim at establishing a just society wherein everyone will behave responsibly and honestly, and not as ‘cunning foxes’ fighting for as big a share of something as possible without regard for honesty, truth, decency, trust and responsibility.

Islam views life as a compact whole and does not divide it into many separate and conflicting parts. The economic aspect is one of the most important parts of our life, while not being the whole of it. The Islamic system is balanced and places everything in its right place. Islam has given detailed regulations for the conduct of our economic life which concerns mainly the earning and use of wealth.

Man needs bread to live but he does not live for bread alone. This means that earning and spending money is essential for our living, but we do not live only for this. We have a greater purpose in life. We are Allah’s agents (Khalifah) on earth. We not only have a body but we also have a soul and a conscience. Without our soul and conscience, we would be considered little more than animals.

Everything in Islam is for the benefit and welfare of mankind. The economic principle of Islam aim at establishing a just society wherein everyone will behave responsibly and honestly, and not as ‘cunning foxes’ fighting for as big a share of something as possible without regard for honesty, truth, decency, trust and responsibility.

While generating massive abundance and wealth of resources by eliminating all the restrictions and oppressive systems that prevent production, Islam will safeguard against abuses of exploitation in acquiring wealth by limiting the way in which wealth is acquired.

Need Writing Help?

Get feedback on grammar, clarity, concision and logic instantly.

Check your paper »

How to Cite this Page

MLA Citation:
“Islamic Banking.” 123HelpMe.com. 02 Jun 2018
    .

Title Length Color Rating  


Islamic Banking and Finance Essay


– 1.0 INTRODUCTION 1.1 Background Study The Islamic banking and finance sector is a fast growing industry, where it expanding and getting stronger each and every year. According to Tahmoures (2013), there are over 300 Islamic banks and financial organizations successfully running their business from Dubai, Los Angeles, London, Karachi, Jakarta, Cairo, Riyadh and many other cities in the world. The Financial Times estimates the value of the industry in overall are exceeding $1 trillion (Christophe, Rima, Laurent, Financial Times Special Report, 2010)….   [tags: Islamic Banking Essays]

:: 14 Works Cited

1937 words
(5.5 pages)
Strong Essays
[preview]


Principles of the Islamic Banking Essay


– One of the most widely quoted operating principles in Islamic banking is the principle of mudharabah, sometimes known as qirad or muqaradah. Mudharabah is a contractual involving two parties which is the provider of funds and the mudharib is agent. There are two ways in which Islamic banks are involved in mudharabah contracts. When clients open investment accounts, the contractual relationship between the bank and the clients is based on mudharabah principles. In this case, the bank acts in its capacity as a mudharib….   [tags: qirad or muqaradah]

568 words
(1.6 pages)
Strong Essays
[preview]


Essay about Awarness of Islamic Banking Culture in Pakistan


– Published information about principles of Islamic banking and finance and their applications is growing day by day. Pakistan is one of the 57 Islamic countries having a total population of over 170 million where majority of population practice Islam. Steps for Islamization of banking in Pakistan were initialized during 1977-78. Elimination of interest from the operations of specialized financial institutions took place in 1979 and from commercial banks during 1981-85. Commercial banks in Pakistan were cased to accept any interest baring deposits and all deposits were treated on the basis of profit and loss sharing since 1985….   [tags: Finance ]

:: 18 Works Cited

3308 words
(9.5 pages)
Term Papers
[preview]


Essay about Profit Loss Sharing in Islamic Banking


– Profit-loss sharing In order to be able to understand the core factors that contribute to the lack of profit-loss sharing in Islamic banking, this mode of financing must first be introduced. The fundamental basis for PLS is based on equity orientation. Such a mode of financing allows all parties involved to share both risks and losses in the ratio of their individual capital input, while the profit is allocated on an agreed ratio. This Islamic mode of banking guarantees the sharing of profits or losses and ensures no accrual of a fixed rate of interest, which promotes the efficiency and stability of the Islamic banking system….   [tags: Finance, Islam]

:: 13 Works Cited

1883 words
(5.4 pages)
Powerful Essays
[preview]


Islamic Banking Practices Compared to Conventional Banking Practices Essay example


– … This study examines the principles and criteria Islamic banking operates in providing their financial services which make different from those of conventional banks. The Methodology To find out more about the usage of profit-loss sharing paradigm in Islamic banking system, the researcher will consider the long-run relation and the short-run dynamics between conventional deposit rates and Islamic investment rates. To investigate about the profit-and-loss sharing paradigm, we follow (Chong & Ming-Hua, 2009) long-run and short-run principles and efficiencies tests to compare the conventional deposit rates with those of Islamic banking rates….   [tags: interest, sharing, integration, loans]

1524 words
(4.4 pages)
Term Papers
[preview]


Principles of Islamic Banking Essay


– INTRODUCTION The basic concept of Islamic banking which is also known as ‘interest-free banking’ is based on basic ethical standards with just one main difference- Muslims are not allowed to pay or receive interest. This does not mean that business activities or making a profit are not encouraged, they are but as long as they don’t involve interest in any form. To fulfil this purpose, financial instruments have been introduced by the Islamic financial institutions to satisfy these requirements….   [tags: Essays Papers]

3055 words
(8.7 pages)
Powerful Essays
[preview]


Financial performance of Islamic banking and conventional banking in United Kingdom- A Comparative Study


– Chapter 1: Introduction 1.1-Introduction to Chapter: This chapter describes the brief introduction about research title, research aims, research objectives, research hypothesis, research context and research limitation used in this research. 1.2-Research Title: Financial performance of Islamic banking and conventional banking in United Kingdom- A Comparative Study. 1.3-Research Aim: The Aim of this research is to analysed and evaluate the financial performance of European Islamic Investment Bank (UK) with Allied Irish bank (UK) and Northern Bank (UK), In Terms of their Profitability, Liquidity, Risk & solvency & Efficiency Ratios which will give an insight comparison of overall financial per…   [tags: Economics ]

:: 5 Works Cited

1634 words
(4.7 pages)
Powerful Essays
[preview]


Islamic Banking Essay


– Islam views life as a compact whole and does not divide it into many separate and conflicting parts. The economic aspect is one of the most important parts of our life, while not being the whole of it. The Islamic system is balanced and places everything in its right place. Islam has given detailed regulations for the conduct of our economic life, which concerns mainly the earning and use of wealth. Man needs bread to live but he does not live for bread alone. This means that earning and spending money is essential for our living, but we do not live only for this….   [tags: Islam Muslim Religion Economics]

1320 words
(3.8 pages)
Strong Essays
[preview]


Concepts of Islamic Finance Essay


– … The principle in Islamic finance include the prohibition of any predetermined payment over and above the principal amount (riba), prohibition of the transaction involving uncertainty about subject-matter and term of contract (gharar) which is refer to the selling of goods that does not exist or does not owned, prohibition on maisir which is refer to the transaction based on speculating or gambling and prohibition on the investment by dealing with unlawful or haram business such as drugs, alcohol and gambling….   [tags: shariah, interest, banking]

878 words
(2.5 pages)
Strong Essays
[preview]


Islamic Finance Industry Essay


– Islamic finance industry in Malaysia has been in existences more than 30 years. The enactment of the Islamic Banking Act 1983 enabled the country’s first Islamic Bank to be established. Malaysia’s long track record of building a successful domestic Islamic financial industry of over 30 years gives the country a solid financial that adds to the richness, diversity and maturity of the financial system. (RosniaMasruki, 2010). Before the advent of Islamic banks, financial market had been monopoly by conventional banks….   [tags: banking, crisis,economy]

933 words
(2.7 pages)
Better Essays
[preview]

For instance, Islam denies the “free” market of Capitalism which has led to the situation of “survival of the fittest”. Such an unrestricted environment has led directly to the current situation where multinational companies have scavenged the resources of the world like parasites unrestricted in their “freedom.” Under the Khilafah, natural and vital resources would be categorized as public property and a right of every citizen of the state – Muslim or otherwise – in accordance with the Prophet’s (saw) Hadith that states, “The humans have a right to three things – water, green pastures, and fire-based fuels (An-Naar).”

What is capitalist system?

The essential capitalist value is freedom, every individual is as extreme freedom/ right to do whatever pleases him until and unless it doesn’t interfere with the right of the other members of society.

Secondly in capitalist system individuals have right to participate in any business they want to increase profits by using four factors of production. The main motive of people in capitalist society is to consume to its fullest. There is no limit to their consumption. This can be supported with the fact that these days even marketers encourage to consume more and more. For example Pepsi’s tag line “Dil Mangey More”, same goes for Mobilink “Unlimited talk time or SMS” etc.

Under capitalist economy, the wealth is produced by using four factors of production. That is Land, Labour, Capital and Entrepreneur or Organization.

Land gets rent, labour gets wages, Entrepreneur gets profit and capital earns interest over it. Wealth is distributed based on participation of these factors in production.

Lastly the major part of capitalist economy is the supply and demand rule. Production and distribution in a capitalist system are governed by the free market rather than state regulation.

What is Socialism?

Where as in socialism there is no concept of individualism. Everything is in the control by State or government. Individuals have not right to participate in any business individually. All the means of productions are central based, state government decides on its own that what goods and services would be produced, how many to be produced and at what would be the sale price.

In socialism instead of believing on individual interest, collective interest is taken care of.

As far as factors of production are concerned, Socialism consider capital and land as collective property. Wealth is distributed only inform of wages. Land and wages are fixed by Govt. There is no concept of individual being and entrepreneur as its only government who has right over everything so the profits just belong to it.

Islamic theory:

When it comes to Islamic concept of economy, its totally completely different from capitalism and socialism. Islam believes in right to private ownership, market forces and profit motives but there are some limitation attached to all of them. Following are the major difference between Islam and other economic systems.

Consumption pattern

Islam doesn’t consider consumption and accumulation end in itself. For Muslims this worldly life is just considered as journey and his final destination is beyond that, which is life after death. So Islam badly restricts its people to go towards the things that tempt him to become greedy. Because our main motive is not running behind more and more money like people in capitalist society because this worldly life is just path between human and its final destination so to spend life here in this word , man just need enough money to spend on the basic necessities or things essential to live this world life.

Ownership of everything:

In Islam, the ownership belongs to Allah only. There is surely the concept of right of property of man but that ownership is not absolute, it has limitations and rules and regulation to be followed, imposed by Allah the supreme owner of everything.

Factor of production

Unlike capitalism and socialism, Islamic economic system has only three factors of production. Labor and land remain the same and will wages and rent in return. However, when it comes to capital and entrepreneur, they both are considered as one. As Interest is haram in islam there fore the risk of profit and loss is attached with the capital. This means, anyone who is investing capital in any business should also bear the risk attached to it.

Right to do anything:

Islam is a complete religion in which every code of life is explained by Quran and Hadith. In Islam no one has given extreme right to whatever he wants to do. Unlike capitalism no individual has given absolute right, to participate in any business he wants to earn profits. In light of islam no one can put money in any activity/ businesss that has considered haram, eg. Gambling, financing in prohibited activites (eg. Alcohol , pork etc), interest, hording etc.

Real nature of wealth:

According to Islam original ownership belong to Allah only and with Allah’s “Taufeeq” no factor of production can produce anything. Man can only invest his labour any process of production but Allah can only give reward or make it fruitful in the end. For example, if some man has sow the seed in the soil but bringing out seedling from it, making the seedling to grow into a big tree is only under control of Allah Almighty.

Check Also

Shia Muslims in Kanpur not to take out Paiki procession in Muharram

Paikis are mostly those people whose families vow to make them as ‘Paik’ during Muharram …

Leave a Reply

Your email address will not be published. Required fields are marked *