Tag: Islamic Finance

The Economic Reality of Islamic Banks’ Transactions: A Qualitative Inquiry

This research paper examines the need for distinct accounting standards for Islamic finance. It collects primary data through interviews of respondents who are affiliated with a bank. It provides analysis in the light of this statement by International Accounting Standards Board “In assessing whether an item meets the definition of an asset, liability or equity, attention needs to be given to its underlying substance and economic reality and not merely its legal form”.

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Expanding the Frontiers of Economics: Some Insights from the Qur’anic Revelation

The noted author is one of the pioneer contributors in the field of Islamic economics. He has written on methodology of Islamic economics from time to time. He is an objective thinker who had made critical evaluation of both mainstream economics as well as Islamic economics on some aspects. In principle, he wants Islamic economics to be an analytical field. He expects that mainstream economics shall avoid bias against religion and should not undermine and disregard knowledge that comes from religious texts. Some knowledge that comes from religious sources dates back to centuries. However, such knowledge is still applicable today. Instead of arriving at same conclusions and reinventing the wheel, it is not unwise to pay heed toward the knowledge that emanates from religion.

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The World Economy and Islamic Economics in the Time of COVID-19

This paper presents statistics to illustrate the economic effects of COVID-19 in the global economy. Poverty and unemployment in the informal sector of developing economies is on the rise. On the other hand, developed economies have also seen economic contraction. Capital markets have seen sharp decline in the early part of 2020. However, the author notes that Islamic equity portfolios were less affected. This finding is discovered in other empirical studies as well where Islamic portfolios are found to perform relatively better in economic and market downturns.

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Clarification of Some Misunderstandings about Islamic Banking

Islamic Banking

When a common person tries to form an opinion about Islamic banking, he hears cliché sayings about Islamic banking, such as ‘Currently, Islamic banking and finance are not truly Islamic’, ‘It is only changing of conventional terms into Islamic terms’ and ‘Islamic banking is an oxymoron as banking cannot be Islamic’. This brief article discusses some points that will help in better understanding Islamic finance and Islamic banking in particular.

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Why Giving Interest is Also Prohibited in Islamic Finance

In Islamic Ijarah and Diminishing Musharakah based contracts, Islamic bank charges rent for the use of asset in its ownership and risk, charges these rents after the asset has been provided to the client in usable condition and only till the asset remains in usable condition during the lease period. These differences also ensure strong links with the real economy and productive sector and limit credit creation other than for genuine value creating economic activities in the real economy.

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