The 2025 Islamic Finance Development Indicator (IFDI) assessed 140 countries, with the global average score declining to 11 due to new entrants scoring low in most indicators. The top 10 countries remained unchanged, led by Malaysia and the UAE, which excelled across all five indicators. Notable shifts include Bangladesh dropping out of the top 10 due to Islamic banking sector challenges, while Tanzania showed promise with Sukuk issuance and sector growth.
Islamic economics is fundamentally a normative field, dedicated to the in-depth study of the normative principles outlined in the Qur’an and the Sunna (religious economics). In its empirical research, it probes into the economic behaviours and values of Muslims. As a result, it extensively utilizes economic tools to comprehend Muslim behaviour, integrating the economics of religion as one method of exploration. In reconciling normative (what should be) and positive (what is) economics, the discipline also emphasizes facilitating the transition from the current state to an ideal one, aiming to transform ‘what is’ into ‘what should be’. This agenda is central to Islamic economics, as it is to religious economics.
The author asserts that Islamic economics is currently the result of applying Islamic rules and injunctions (Fiqh) to the secular economic framework, and is not yet a separate discipline that fully replaces secular economics. The author notes that methodology is a messy and confusing area in both fields. He highlights that in Islamic economics, it is often wrongly treated as a research design or work plan. The author explains that economics is usually called ‘science’ and is seen to be built for achieving its objectives on some perception of rationality. Methodology is the ‘theory of theories’; in the field of economics it refers to the “process economists use to authenticate the knowledge about economic phenomena”.
Islamic digital currencies must refrain from a number of actions deemed prohibited by Islamic law, in contrast to traditional cryptocurrencies like Bitcoin. They cannot entail interest-based transactions (Riba), undue speculation or uncertainty (gharar), or gambling (maysir). Their frequent backing by physical assets, such as gold, gives them inherent stability and lessens the speculative bubbles that are typical of traditional cryptocurrencies, which is what makes them so intriguing.
Author explained the problem of double coincidence of wants in the barter trade. He wrote that even if the wants coincide, there may be disagreement on the counter values in exchange. Without divisibility of the good, the barter economy runs into barriers to trade. He also wrote on prudence in economic management. He emphasized the need for proactive procurement and infrastructure investments to ensure smooth supply chain, production process and market stability. He favoured procurement from the original nearby source to avoid intermediation mark-up and make purchases when the market has adequate supply and availability so as to avoid cost-push inflation.
Entrepreneurs may have less or more capital than they plan to invest. Owners of surplus capital may withhold it or may make it available to investors. This may be based on profit sharing ratio or interest. In the Islamic system, charge of Zakah assisted by expected share in profit motivates the owners of capital to get it invested while in a capitalist system, interest motivates the capitalist creditors to lend capital for earning interest.
Halal ESG shaped by Tawhidic epistemology is not merely an alternative model; it is a civilizational intervention—calling for harmony between the sacred and the temporal, between environmental responsibility and metaphysical awareness, between economic development and divine accountability. It is this synthesis—rooted in Tawhid, driven by Ummatic consciousness, and aspiring toward Ummatic excellence—that will enable halal industries to become ethical vanguards in a fractured world.
Using a contract-theoretic model, Khan compares two financial arrangements: the Fixed Return Scheme (FRS), which mirrors conventional debt, and the Variable Return Scheme (VRS), which represents profit-and-loss sharing (PLS) contracts such as Mudarabah or Musharakah. His analysis assumes a single lender allocating a fixed pool of funds across many independent projects, with symmetric information and costless observability.
The earlier scholars provided application of Islamic juristic principles to derive and apply the Islamic teachings related to commerce, entrepreneurship and consumption. Muslim scholarship initially focused on public finance and its administration to deal with the practical problems of the newly formed state which expanded rapidly and required sound legal and administrative framework to legislate economic activities centred around agriculture and trade.
The global momentum behind sustainable development has elevated ESG principles to a central position in both corporate and public sector strategies. The Global Sustainable Investment Review (2020) reports that assets managed under sustainable investment strategies reached USD 35.3 trillion, representing over one-third of total professionally managed assets worldwide. Despite this impressive shift, the practical implementation of ESG is beset by challenges, with the agricultural sector particularly affected due to its central role in food security, economic development, and environmental stewardship. Conflicts over land rights, water resources, environmental impacts, and social inequalities are common and often impede progress toward sustainability and inclusivity.
Islamic Economics Project 