An Intro to Islamic Economics and Finance

Principles and Practical Applications

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Why Now?Crash of 2008 was “mother of all economic crisis and that

it will be with us for a long time”Data since the 2008 Crash

Loss of people’s savings & retirement, devaluation of property

Layoffs on a massive scaleHigh unemployment rates

US ~ 9% CA ~12%

Debt levels are at an all time highSeparation between the wealthy and the poor continues to

growRepossession and foreclosure of homes

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Implications on Muslims in AmericaMany in Muslim community affected

Immigrants of older ageNew graduates not finding workNew students pay more for college and borrow

at higher interest ratesGov’ts cutting back on services and hiring,

while banks are restricting lendingMuslims are vested in the financial sector

and are part of the crisis

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The Source of WealthAccording to Quranic verses, every thing in this

universe belongs to God almighty.

"Whatever is in the heavens and whatever is in the earth belongs to Allah." [Al-Baqarah, 2:284].

جميعا األرض في ما لكم خلق الذي هو

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Holistic Sharia Based View

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Law & Justice

Commerce & Economy

Politics & Governance

Social, moral & ethical life

Knowledge & learning

Hygiene

Human Rights & Relations

Ethics & Etiquettes

Moral Ethical Social Religious and more….

Governed by Shari’ah Principles (Quran & Sunnah)

such guidance covers all walks of lifeNot confined to Muslims only, but for the entire mankind

Objectives of the Islamic Economics

1. Ethical wealth accumulation

2. How to spend the wealth

3. Utilization of public capital

4. Preservation of Property

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Real vs. Fiat Currency

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Foundations of Islamic Economy That which is permissible in the Quran and benefits Allah’s

creations on Earth

1. Justice – environmental, societal, equitable

2. Cooperation & Brotherhood – i.e. Do not go to sleep knowing that your neighbor is hungry

3. Free markets – Government interferes only when there is manipulation or collusion

4. Prosperity – Encouragement of business over subservienceHe knoweth that there may be (some) among you in ill-health; others travelling through the land, seeking of Allah's bounty; yet others fighting5774 in Allah's Cause, read ye, therefore, as much of the Qur?an as may be easy (for you); and establish regular Prayer and give regular Charity; and loan to Allah a Beautiful Loan.

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Permissible TransactionsSale / TradeLease / RentalPartnership / Joint Venture / Cooperative

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Forbidden TransactionsLending in Interest (Usury/Riba)Speculation ( Options / Futures / Indexes /

Derivatives)Immoral goods ( Pornography, Drugs,

Alcohol, etc.)

In ConclusionIslamic finance must be portrayed as a

‘distinct alternative’ to conventional finance that enhances society and encourages transactions within the real economy, otherwise Islamic finance will be portrayed as ‘just another type of financial product/service’ under the conventional banking umbrella

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