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

Islamic Finance Law - Dissertation ExampleThe paper would therefore be analysing the role of Islamic finance in the tight transforming environment of spheric economy with the view that it has brought in more radical but ethical paradigms within monetary system of contemporary times. Historical compass 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 crocked trade relationship with their European counterparts, Islamic finance was closely aligned with that of European financial system. The system worked on the basis of sharing of profit and impairment (Chachi, 2005). But 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 based on interest bearing instruments, Islamic finance was rigidly guided by the religious tenets of Islam which forbids transactions based on in terests or gains made through wrong means (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 coifs in personal and business arena. Thus, Shariah raft broadly 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 pep up 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 law compliance is vital element 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 and so forth and is fast emerging as credible alternative investment forum. Main Sharia compliant transaction structure and how they are used in practice All Islamic financial institutions are distinct in their constitution of board that comprises of financial experts and shariah scholars who evaluate the validity of financial 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). approximately 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(prenominal) make donation of 2.5% of their yearly assets. The social funds are used to meet the needs of the poor. Murabaha