Islamic Finance - Conformity to the Sharia
Conformity to the Sharia The observance of Sharia law lies at the heart of the Islamic financial system. IFIs, Islamic insurance companies, Islamic funds, and any other providers that offer Islamic financial products are required to establish a Shari'ah
Islamic Finance - Products or services that are against the law
Products or services that are against the law One more requirement that must be met for Islamic finance to be considered legitimate is that it cannot be used to facilitate the sale of products or services that are illegal. These forbidden goods and servic
Islamic Finance - The fundamental tenets of Islamic legal precedent
The fundamental tenets of Islamic legal precedent Simply put, Islamic finance refers to any financial dealings that are in accordance with Sharia law. In addition to adhering to the characteristics described above, Islamic financial products and services
Islamic Finance - Riba
Riba The Arabic word riba can be literally rendered in English as either usury or interest. Regardless of the amount that is paid back, any premium that is levied for money that is borrowed is considered to be riba. Riba can be defined in its most basic
Islamic Finance - The Gharâr
The Gharâr Another thing that ought to be avoided in any transaction is something called gharar. Gharar is an Arabic word that means "ignorance" or "uncertainty," and it describes a situation in which there is a possibility that the outcome would be unfa
Islamic Finance - A division of profits and losses
Islamic Finance - A division of profits and losses In addition to these two prohibited things, the concept of profit and loss sharing is closely associated with Islamic finance because of its close ties to Islamic economics. IFIs will share the profit or
Islamic FInance - Islamic financing in contrast to more traditional forms of finance
Islamic FInance - Islamic financing in contrast to more traditional forms of finance Because money cannot generate additional income on its own, direct dealings with money are not permitted in Islamic finance and should not be allowed either. To generate
Islamic Finance - Shariah compliance as it relates to the stock market
Shariah compliance as it relates to the stock market When compared to the equity market, Islamic finance and conventional finance are more easily distinguished by banking and insurance products as well as fixed income instruments due to the stricter regul
Islamic Finance - The fundamentals of Takaful, often known as Islamic insurance
Islamic Finance - The fundamentals of Takaful, often known as Islamic insurance In the context of Islamic insurance, which is more commonly referred to as Takaful, it is forbidden for the insurer, which refers to the insurance business, to provide indemn
Islamic Finance - Distinctions that differentiate conventional and Islamic financial systems
distinctions that differentiate conventional and Islamic financial systems From a contractual and a transactional point of view, Islamic capital markets that include both equity investments and fixed income instruments are required to steer clear of some