Displaying items by tag: Islamic Finance

Friday, 14 September 2012 15:38

Pitfalls of interest-riba (revised)

Lending at interest has several significant, albeit infrequently noted, shortcomings. It contributes to inflation and widens the gap between the wealthy and the less well to do. Interest-based lending adds to inflation in at least two ways. A substantial amount of spending is financed by money borrowed at interest. Household, corporate and government debt levels are at all time highs in many countries. The extra demand for goods and services, made possible by borrowing, adds to “demand pull” inflation.......... Download the full article in pdf attachment (below) [revised 21April2012]

Thursday, 13 September 2012 16:45

Transforming interest based financing into PLS

The fundamental inefficiency of interest-based financing means that the typical economy will unavoidably operate at below full employment capacity. In other words, it will only be able to produce a lower than potential output. This signifies a degree of waste. As a result of artificially depressed levels of overall production resulting from the utilisation of interest-based financing,........Download the full article in pdf attachment (below)

Thursday, 30 August 2012 11:29

Interest-based financing and economic stability

Stability is a property of persons, objects or systems. It is the capacity of a person, object or system to resist change. When we describe a person, object or a system as stable, we mean that the condition, position, or composition of the person, object or system is unlikely to change or change easily. Stable does not mean static, as change can take pace in a stable way. Stability can be broadly contrasted with chaos........Download the full article in pdf attachment (below)

Tuesday, 28 August 2012 15:21

Legal vs beneficial ownership in Islamic Finance

Ownership is the right to possess, use, sell, donate or give as a gift any asset (property) belonging to a person known as the “owner.” Ownership (milkiyah) is not the same as possession (qabd), as it is possible to own something without possessing it, or to possess something without owning it. Children may “own” items such as toys. However, from a legal point of view, the parents are the legal owners of their children’s belongings.......Download the full article in pdf attachment (below)

Tuesday, 14 August 2012 11:02

Commitment and belief

WILL the "truth" set Islamic banking free from the "cheer-leading reins" that may be holding it back from authenticity-cum-innovation? Today, Mushtak Parker provides his insights on a successful Islamic banker and institution and some of the milestones of the industry.......Download the full article in pdf attachment (below)

Equitable sharing of wealth brings a number of advantages. When wealth is shared equitably – in other words justly – all members of society are able to gain and keep some wealth. Thus, everyone has a reason to become and remain a content member of that society. This contributes to peace. A community is bound together more firmly when wealth is shared than when it is distributed unevenly......Download the full article in pdf attachment (below)

Economic instability invariably causes hardship and moreover reduces the efficiency, in one way or another, with which resources are allocated. A significant degree of instability, as is widely believed, is caused by fluctuations in aggregate demand. However, much instability is also caused by interest-based financing. Economic instability commonly causes a range of inefficiencies, in one form or another............. Download the full article in pdf attachment (below)

Tuesday, 24 July 2012 13:27

Stabilising fractional reserve banking

The modern banking system is known as the “fractional reserve system.” The reason is that in this system, financial institutions are legally permitted to take a certain amount of risk with their depositors’ funds. This risk arises from lending the vast majority of deposits out at interest to various parties willing to borrow. The shareholders of financial institution earn interest income by making loans using depositors’ savings to borrowers at rates higher than those they pay to depositors............. Download the full article in pdf attachment (below)

Thursday, 19 July 2012 14:42

Interest-based financing and unemployment

Unemployment is a condition of idleness, whereby the unemployed person can find no work, and may thus become a burden on his family or society, or even turn to crime to survive. Contrary to a popular but misleading notion, there is no “natural” unemployment. All unemployment is unnatural, as it is hardly natural for a healthy human being capable of work to remain idle for any length of time............. Download the full article in pdf attachment (below)

Tuesday, 17 July 2012 14:36

Finance: Islamic and conventional

“Finance” has both a theoretical and a practical meaning. In the theoretical sense, finance is the knowledge of acquiring and allocating (utilising) funds, public as well as private. In the practical sense, finance is the management (earning and spending) of funds to achieve specific objectives, personal or social............ Download the full article in pdf attachment (below)

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