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Family & Consumer Science
Pages 6 (1506 words)
Islamic Finance Introduction Islam is a blessing to man from Allah, and it is the complete way of life. That also includes how we conduct our financial dealings. The Islamic economic system revolves around core principles which structure and develops a robust business cycle…
Instead Islam asks for an equitable distribution of wealth so that all members of society can prosper together. Concentration of wealth in a few hands is not desirable. Islam strikes a balance between conventional socialism and capitalism. One allows only for private ownership, while the other negates it outright. It is the Islamic way that has sought a path between the two extremes for the betterment of man. Unlike conventional systems, Islam recognizes only 3 factors of production which include capital, land and labor. The returns generated from the combination of these three are distributed accordingly. Capital gains return in the form of profits, land in the form of rent and labor in the form of wages. Islamic Contracts Islamic contracts govern the business conventions on how trade transactions must be entered into. First of all, the trade must be permissible in the light of Shariah. It cannot contain any element of Riba’, Gharar, Mysur, Haram etc. Secondly, there are many conditions which must be fulfilled in order for a contract to be rendered valid. They include: A condition which is not against the contract is a valid condition A condition which seems to be against the contract, but is normal market practice, is no void unless proved in the light of Shariah. A condition which seems to be against the contract and not market practice but favors any one participant is void. ...
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