Disclaimer: This is an example of a student written assignment.
Click here for sample essays written by our professional writers.

Any opinions, findings, conclusions or recommendations expressed in this material are those of the authors and do not necessarily reflect the views of UKEssays.com.

Islamic finance

Info: 215 words (1 pages) Assignment
Published: 12th Jun 2020 in Assignment

Reference this

Question

What is Islamic finance?

Answer

Islamic banking was mainly practised in Muslim countries, however, over time many European countries have begun adopting Islamic banking. Islamic finance can be summarised as a financial system that operates under the shariah law. Islamic banking is different to the conventional financial system, as features such as banks and investment institutions are operated under Islamic finance. The main concept of Islamic finance is the prohibition of Ribah (interest). Islamic banking also adheres to prohibiting all that goes in contradiction of the Shariah law, for example avoiding any form of transaction with alcohol and gambling. Fundamental concepts of Islamic banking also include the significance of risk sharing while trying to raise capital. Equally, Gharar (risk or doubt) is another important concept in which any form of trading that shows signs of uncertainty is prohibited. An example of a permissible financing method is the Mudarabah (profit-and-loss sharing), in which Islamic banks typically group investors’ capital, which is then invested in Sharia compliant investments/funds. It must be noted that both parties agree to a profit and loss sharing ratio prior to the investment taking place.

References

 

Cite This Work

To export a reference to this article please select a referencing stye below:

Reference Copied to Clipboard.
Reference Copied to Clipboard.
Reference Copied to Clipboard.
Reference Copied to Clipboard.
Reference Copied to Clipboard.
Reference Copied to Clipboard.
Reference Copied to Clipboard.

Related Services

View all

DMCA / Removal Request

If you are the original writer of this assignment and no longer wish to have your work published on UKEssays.com then please: