Islamic Finance Law Dissertation Example | Topics and Well Written Essays - 1500 words

Islamic Finance Law - Dissertation ExampleThe paper would therefore be analysing the voice of Islamic finance in the fast transforming environment of global thrift with the view that it has brought in more than radical alone honourable paradigms within fiscal system of contemporary times. Historical background The ottoman Empire in the pre WWI era has perhaps been the most prominent exponent of using tenets of Islamic finance in their trade and business transactions. The close trade relationship with their European counter sections, Islamic finance was fast aligned with that of European financial system. The system worked on the basis of sharing of profit and loss (Chachi, 2005). that post WWI and WWII brought into focus the divergent ideologies of two financial system into sharp focus. While the western economy and financial system was ground on interest bearing instruments, Islamic finance was rigidly channelise by the religious tenets of Islam which forbids transactions based on interests or gains do through unethical elbow room (Ahmad, 1972)). In the contemporary times, Islamic finance has seen unprecedented growth primarily because of its fundamental principles based on Shariah guidelines (Anwar, 2008 Sundararajan & Errico, 2002). Principles of Islamic law and financial transactions under it Islamic finance is based on Islamic law that conforms to the Shariah guidelines of ethical practices in personal and business arena. Thus, Shariah can generally be referred as Islamic law that defines the duties of man and the way they should be carried out (Vogel & Hayes, 1998 Hasanuzzaman, 1997). Shariah is part of Quran, the religious scripture of Muslims and is written in Arabic language. The interpretation of Shariah scholars therefore, may differ but the fundamental principle of ethics remains same. But Hadith, qiyas, idjma and fatwas are also key sources which inspire the ethical and moral considerations within the business transactions in Islamic finance (El-Gamal, 2006 Shahrukh, 1997 Pryor, 1985). Shariah principles are based on equity and prohibit financial transactions and activities that incorporate gharar (uncertainty), maiser (gambling) and riba (interest income) (Thomas, 2005 Nienhaus, 1986 Hasanuzzaman, 1994). The shariah compliance is vital factor of Islamic finance products. Interestingly in the current times of highly sensitive global market, Islamic finance offers huge incentives in terms of ethically delivered financial instruments in myriad areas of finance (Venardos, 2005 Cooper, 1997 Ariff, 1988). It has made forays into banking, market risks and credit, insurance, liquidity management etc. and is fast emerging as credible alternative investing forum. Main Sharia compliant transaction structure and how they are used in practice all told Islamic financial institutions are distinct in their constitution of board that comprises of financial experts and shariah scholars who pass judgment the validity of fina ncial instruments as per shariah principles. It uses various financial structures that conform to shariah but at the same time, adequately meet the needs of people in the contemporary times (Hasanuzzaman, 1971 Saeed, 1995). Some of those financial methodologies can be defined as under Zakah It is vital instrument that promotes social justice by ensuring that people who own more than nisab (basic need) must make donation of 2.5% of their yearly assets. The social funds are used to meet the needs of the poor. Murabaha