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Five essays in "Legal and Regulatory Issues in Islamic Banking and finance"
Finance & Accounting
Pages 5 (1255 words)
1- Discuss the key elements of a legal framework for efficient functioning of Islamic banking. Islamic banks can provide efficient banking services to the nation if they are supported with appropriate banking laws and regulations. This will aid them to introduce PLS and other Islamic modes of operation, which are very conducive to economic development.
However, in some cases Islamic banks can operate with a relatively limited efficiency facing a variety of regulatory challenges, but still they wouldn’t be operating as ideally efficient banks. This decrease in efficiency is not due to mechanical deficiencies inherent within Islamic banking, but to the inefficient operation of the conventional banking system, which obstructs the operation of Islamic banks as the symptoms of a conventional banking system pervades to Islamic banks likewise the conventional banks. This does not mean that the survival of Islamic banks operating within the conventional banking framework is threatened. Some regulators try to overcome this by adopting a separate Islamic banking regulatory framework parallel to that of the conventional banks. Ahmed stated that the challenge for Islamic law was to create financial contracts from traditional nominate contracts to meet the modern day needs of financial markets and intermediaries. Recent history of the growth of the Islamic financial sector is an indicator of the adaptability of Islamic law to changed situations. Given the principle of permissibility, Islamic commercial law can evolve as long as the limits imposed by Shariah are not traversed. ...
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