Islamic Finance

The financial crash and subsequent downturn have shaken the global economic system to its core. The events of recent years have thrown mainstream economic thinking into disrepute. In the aftermath of the crash, scholars and commentators are turning to Islamic finance theory as a way of better understanding how the world financial market will really work and how the economic system might be managed more effectively. Although Islamic finance theory offers a far better account of how a financial market functions, we do not yet have a clear idea of its implications for policymaking without a proper Islamic economic system. However, many commentators of Islamic financial system think that Islamic finance is probably the only hope in cities. In an Islamic economy, the money itself has no intrinsic value and the use of money for the purposes of making money is expressly discouraged. The principal means of Islamic finance are based on trading and it is essential that risk be involved in any trading activity. Any gains relating to trading are shared between the person providing the capital and the person providing the expertise. And eventually this theory of Islamic finance lies in the principles of the Shari[ah, or Islamic Law, which is taken from the Qur’an and the examples of the Prophet Muhammad (peace be upon him).