Tag: Zakat

Zakat Rate as Base Risk Free Rate in Post-LIBOR Era

A key maxim of Islamic jurisprudence suggests that in the matter of commercial transactions, everything is deemed permissible unless explicitly stated otherwise. As long as the transacting parties adhere to the principles of Islamic jurisprudence while applying the benchmark to their transaction, it is acceptable to utilize a consensus methodology. In place of risk free rate or base rate of expected return on investment, some thinkers in Islamic finance suggest the possible use of Zakat rate.

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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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Economics of Wasteful or Excessive Consumption

Islamic economics principles discourage excessive spending and encourage sharing resources with wider community through Sadqa, Waqf and Riba-free Qard. This can provide more resources at the disposal of poor and needy and for the social causes which are working for the educational and health related needs of poor and needy. Therefore, this can help in tackling poverty, hunger, low levels of schooling and under-provision of health services.

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Issues in the Implementation of Ushr in Pakistan

The major issue is that the government has not been active in the collection of Ushr. Furthermore, historically, it never achieved its true potential in terms of the amount collected due to the trust deficit between the government and the landowners. It is also a fact that some greedy landlords try to evade it. On the other hand, poor knowledge about Ushr among the landowners results in the meager collection of Ushr at the national level.

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Islamic View on Scarcity of Resources

Socialists claim that economic problems arise from the extraction of surplus value by the Capitalists in the production process. On the other hand, Capitalists urge that scarcity of resources is the basic economic problem which restricts output growth because wants are innumerable, but the resources for satisfying those wants are limited. Nonetheless, the empirical evidence does not support that resources are scarce for legitimate and compulsory economic needs.

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