What is Islamic finance?

Islamic finance

What is Islamic finance?

Sharria and Islamic Finance

Islamic finance is based on the Sharanh, a source of Islamic scripture, the Quran (Al-Quar'a: n), and the prophet Muhammad's conduct, which is a rule of Muslim life based on Sunnah. ) Is a financial transaction such as banking, securities, or insurance.

Shariah means "way of people."
It is called Islamic law and Islamic holy law.

In the Islamic world, money is considered a means of preserving value, and money itself does not create value unless it is invested in the real economy.

They do not consider money as a commodity, and money does not create value outside of commercial and living activities.

For this reason, a money lending business is not established in an Islamic society.

Sharria has banned the following items, which are key principles in Islamic finance.

  • 1 Riba: Prohibition of imposing interest on the use of money

    The word river has a broader scope than the Western concept of interest, and applies to all profits from unfair and unfair transactions between sellers and buyers, or profits earned as unearned income.

    It is difficult to interpret the concept of pre-modern rivers only in the context of interest, as the grounds for banning the river involve not only fairness and unearned income but also Islamic-specific ownership and equivalent exchange.

  • 2 Gharar: Ban on uncertainty during contract

    Future waivers, options, futures, derivatives, agreements on damages and contracts for economic losses are prohibited.

  • 3 Maisir: Prohibition of speculation

    business transactions based on pure speculation, such as gambling, are prohibited.

  • 4 Haram: Use or prohibit illogical transactions

    Unethical transactions such as pork, alcohol, tobacco, weapons, pornography, etc. are prohibited.