The question arises that if people are generally risk averse, are interest based investments and lending not the safest option to these people in which except from default risk, people are safe from fluctuations in payoffs and there is less uncertainty in payoffs. This article discusses how Islamic economic framework incorporates diversity in risk preferences.
Salman Ahmed Shaikh
PhD Economics, National University of Malaysia. Author, Researcher, Teacher and Consultant. He can be contacted at: email@example.com
Islamic injunctions put huge emphasis on making best use of the resources provided by Allah. Cultivating barren land and dignity of labor is given significant value and regarded as virtues. In an Islamic economic framework, the demand for economic resources, i.e. land, labor and capital is driven by the interest free and productive asset/activity based voluntary exchanges in a market economy.
Scarcity of resources is the basic premise on which the theories of classical and neoclassical economics are based upon. It implies that resources are scarce relatively as compared to the wants that are unlimited. But, this premise uses the word ‘wants’ in a general sense which includes both necessities and luxuries that people desire to have.
With higher levels of investment, circulation of wealth and competitive markets, innovation and quality enhancement will be the only means of sustaining the edge for firms in an Islamic economic framework. Hence, there will be more focus on innovation, customer satisfaction and hence speed of innovation and productivity is expected to increase. The supply side of innovation, which is the human capital, will also be incentivized through employment creation as a result of removing concentration and idleness of wealth.
Islamic finance industry assets are now worth more than $2.6 trillion by 2019. The industry has shown resilience and double digit growth even in the face of global economic slowdown. After substantial double digit growth in assets, customer base and profits, Islamic banks are expected to embrace the vision to provide an egalitarian financial system which is inclusive for all and avoid the pitfalls which the conventional banking based on interest could not avoid.
When we look at Islamic environmental ethics encapsulated in Islamic principles, we find that they compliment these SDGs and can act as a catalyst to foster commitment, responsibility and affirmative action for sustainable and congenial co-existence with environment.
Most developing countries are going through a perpetual debt trap which takes away resources that could have been used on development, but instead are used to service compounded debt.
Hajj is an important Ibadah in Islam. It is compulsory for every Muslim to perform Hajj once in a life. This article looks at the philosophy of various rituals involved in Hajj and how they exhibit a believer’s acceptance of Tawheed (oneness of God), his determination of following the commands of Allah and his vow to sacrifice his wealth, interests and time for Allah’s sake.
This article looks at the social and cultural importance of Hajj and what implications it has at an individual level and how it shapes societal behavior and actions.
Prophet Muhammad (pbuh) delivered His last sermon (known as Khutba-e-hajjatul-Wida) on the ninth of Dhul Hijjah in 10th year after Hijrah (migration from Makkah to Madinah). The sermon was delivered in the valley of mount Arafat. It was the best example of eloquence, brevity, conciseness and the content of the message emphasized upon justice and equality. The message in the sermon was delivered more than fourteen centuries ago and is an essence of the true message and philosophy of Islamic faith.