Islamic finance is governed by the Islamic law (shari’ah) and the sources from Quran and Sunnah. Islamic finance is the financial framework that comprise the activities according to Islamic law that known as Shariah principle. In Islamic law, any activities involved must be prohibiting from riba. Riba means extra or excess interest in payment made by buyer or customer to the seller or bank. Besides riba, Shariah Law also prohibits any transactions that contain gharar (uncertainty) and maysir (gambling). In Islam, any business activities must be clear and based on Quran. For example, Islam prohibit from investing business in unlawful and haram like run business in producing media such as gossip column which are contrary to Islamic values. The sources of Shariah Law is come from Quran, Sunnah, Ijmaa’ and Qiyas. Quran is refer to the words of Allah revealed to Prophet Muhammad s.a.w. Ijmaa’ is the opinion and agreement between Muslim jurisconsults while Qiyas is application and extension of law established by binding authority to a particular case and compare a new case with Divine text with same and common effective cause (illahi). Islamic finance also can be categories into three sections, there are about faith and belief, practice and activities and moralities and ethic. Under practice and activities, it can be divide into two which is ibadat (relationship with God) and mu’amalat (relationship with others human). In mu’amalat, it separate to political, economic and social activities.
ISLAMIC FINANCE HISTORY
First effort of Islamic finance is in 1960’s. In 1963, Mit Ghamr Local Saving Bank was established in Eygpt. The operation is based on German Saving Bank. The purpose of the bank is to mobilize the idle saving of Musl...
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...ribute profit to the customer which is can be calculated based on gross profit is permissible. In current practice in Islamic financial system, they used to calculate the gross profit between institution and customer by deducted whole operation profit and investment finds to direct expense. After getting the value, the institution will get the actual value to the customer. Based on SAC meeting, they conclude that the method is permissible. It is because the institution have aim to safeguard the customer as the depositor and investor in their institution. In musyarakah contract, all partners were agreed about the proportion of gross profit and net profit. But in mudharabah case, majority consulters agreed that the mudarib must responsible to bear the whole operating cost include indirect cost. Therefore, the method to distribute gross profit is must meet the need.
The rise and expansion of Islam has restricted Islamic women’s rights since the 18th century. Islamic women are expected to be obedient to men (Documents 3 and 10), are covered up at the expense of men (Documents 7) and are met with backlash when trying to gain rights (Documents 6, 8, and 9).
In the investigation of Islam, the five pillars of Islam provide a glimpse of the life and obligations of the Muslim. The main pillars include confession, prayer, fasting, almsgiving, and pilgrimage. This essay will provide a brief overview of the pillars, how prayer is lived out in an individual Muslims life, and how Christians assimilate to Muslim culture in Saudi Arabia.
There are five pillars the Islam is built on. Muslims believe that God or Allah is the only deity. Most importantly, Islam is a faith of peace and submission to God.
The religion of Islam dates back to the 7th century CE and the life of its founder, Muhammad of Mecca, in Saudi Arabia. Islam is an Arabic word meaning: making something safe and secure, making something sound and whole, entering into peace and tranquility, and surrendering to something other than oneself. A follower of Islam is called a Muslim. In the religion of Islam, it requires the belief in certain core tenets, which include the articles of faith and the five pillars of worship. These two combined, form the Islamic creed.
Zaidon, S. (2008). Satu Tinjauan Literatur Penggunaan Portfolio Kanak-Kanak. Kampus Pendidikan Islam, Maktab Perguruan Islam.
Islamic finance is a financial system that operates according to Islamic law (which is called sharia) and is, therefore, sharia-compliant. Just like conventional financial systems, Islamic finance features banks, capital markets, fund managers, investment firms, and insurance companies. However, these entities are governed both by Islamic law and the finance industry rules and regulations that apply to their conventional counterparts. Therefore, islamic finance is to be assets based as oppose to the currency based whereby investment structured on exchange or ownership of assets, and money is simply mechanism for transaction process. It would based on two sources which are Al-Quran and As-Sunnah.
The worship of Allah is principal in a Muslim’s mind at all time. There are also five formal acts of worship which help strengthen a the faith and obedience of a Muslim. They are frequently called the “Five Pillars of Islam”. The Five Pillars of Islam are the framework and guidelines of the Muslim life. They are the testimony of faith, prayer, supporting the needy, fasting during the month of Ramadan, and the once in a lifetime trip to Makkah for those who are able to do so. These Five Pillars are the thing Muslim’s do to please God and to keep themselves well and happy in this lifetime and for the future ones to come. It was Prophet Muhammad, the founder of Islam, who was reported to have said, “Islam is based upon five pillars”.
Alternatively, when expenses exceed revenue for a defined period, an operating loss shall be recorded. Mudarabah operating loss which is measured during the operating period may be offset against prior or future profits. Loss shall be solely borne by the capital provider except in the event of misconduct, negligence or breach of contract by the manager. The manager may not undertake to bear the loss. The manager may bear the loss at the time the loss is realized without any prior condition or undertaking. A third party may undertake to bear the loss of capital due to misconduct or negligence on the part of the manager. The capital provider may take collateral from the mudarib, provided that the collateral could only be liquidated in the event of negligence or misconduct or violation of term of contract by the Mudarib. Capital loss shall be recognized when the loss occurs prior to the commencement of the business or due to extenuating circumstances beyond the control of the manager and not due to the negligence or misconduct of the manager. The Mudarabah agreement may be mutually reviewed to ascertain whether the capital loss impairs the future performance of the business activity and the partners may decide to restructure the agreement accordingly. Operating loss shall be recognized when the loss occurs during the course of ordinary business. The losses may be carried forward to the next period and subsequently, be set-off against prior or future
As the world has recently passed through the global financial crisis that begun in 2008 in the USA with the banks’ collapsing, analysts are giving different opinions and making new economic hypothesizes about the origin of, as well as the process of different countries escaped from the crisis. Among all these new “theories”, the case of Islamic banks is interesting in terms of its nature and consequences. In my essay, I will try to highlight the basic principles of the Islamic finance, the reasons of the restriction of interest, the most important tools used by Islamic banks in economic activities and brief explanation of them, and finally my view point of the probable future improvement of the Islamic financial system.
Muslim women come from the Islamic faith. Islam is a monotheistic religion where its followers (Muslims) believe there is only one true God, Allah, and honor and love the Prophet Muhammad (peace and blessings be upon him), the last prophet of the God. Just like in any other religion, Muslims, particularly women, have rights and requirements within their religion. As well as wearing hijabs, Muslim women have the right to dress however they like, choose who they would like to marry, have the right to an education, and lead an imam.
“Women’s rights in Islam” is great controversial topic going on nowadays. The world is colored with different cultures and religions. Most people come up with different thoughts for other religion’s people by just having one look on them. Veil is obsession for some people, whereas, being bald is freedom in some people’s point of view. There are lots of misconceptions about women’s rights in Islam among non muslims. If women are covering their body or if they like to stay at home, people think that they don’t have any freedom in this religion and women are obsessed. But this is not reality. A person cannot point out anything wrong and blame other’s religion just because of his own confusion. He needs to study thoroughly and then come up with opposing viewpoints. Therefore, the misconception about women’s rights in Islam should be removed because women have equal rights, veil is for their protection, and they have freedom of speech and expression.
The overall discussion of risk management based on the Islamic law or maqasid al-shariah. Chapra quotes al-Ghazali in defining maqasid as promotion of “the well-being of the people, which lies in safeguarding their faith, self, intellect, posterity, and wealth (ISRA, 2011). Economic activities are not judged by their inherit risks, but by whether they add value and/or create wealth from an islamic perspective. To makes risk management an imperative for a flourishing financial system, wealth protection is being one of the major shariah objectives.
Lastly the challenges faced by the Islamic banking is the lack of unity in giving Shariah’s view. Therefor, it gives problem to the agencies as there are different methodologies that are being proposed when elaborating the law. In order to counter this challenges, agencies need to take initiatives of choosing the view which is parallel or nearly parallel with what was underlined by the Al-Quran and As- Sunnah.
A variety of groups are concerned in bank profitability for various reasons. The bank shareholders would want to know if the value of their investments is high or low. The investors also use current and past performance to predict future price of the banks’ shares traded on the stock exchanged. The management of the bank as trustee of the shareholders is evaluated and compensated on the basis of how well their decisions and planning have contributed to growth in assets and profits of their banks. Employees of bank also are concerned with profits, since their salaries and promotions are frequently tied to the profitability performance of their banks.