In market ecoomies, price is determined by the forces of demand and supply in the market. Islamic economic system, in fact is based upon the principle of justice which governs all the basic aspects of economy like production, distribution, consumption and exchange. J.M. Muslims are to recognize that wealth, earnings, and material goods are the property of God and that we are merely His trustees. The bank borrows (and depositors lend) and then lends (and users of tends borrow). a share in the profits generated through the use of savings and not a predetermined fixed return. Standard economic analysis tells that interest rates play important roles in the economy. An institution that specializes in credit analysis is more efficient in minimizing the risk involved in lending because of its ability to gather and analysis information. These are following…. This is because is considered interest a “reward” given to the saver. It is because of this, we find that people in antiquity had always had arrangements to carry out such function. Two main points related to the economic system and the distribution of wealth and productivity in Islam; need further consideration as a prelude to delve into related issues. Giving more time to debtors who genuinely are not capable of making their timely payments , is by itself considered a sort of donation, and generously rewarded in the hereafter. Islam has given detailed regulations for our economic life, which is balanced and fair. However, even the prohibition of increase in these two transactions shows Shari’ah recognition of the time value of money. Provide Islamic perspective on prices and allocation through critique of the market mechanism, Develop an understanding of the Islamic theory of demand and supply in an Islamic framework, Identify the problems and issues, thereby facilitating the decision making process in search for an Islamic alternatives to market price where ever it is needed, In traditional societies, market price is determined by the convention of the past, based mainly on the principle of reciprocity, In command economies, the division of social product is primarily carried out by the state management and administered prices. Islamic economic system, in fact is based upon the principle of justice which governs all the basic aspects of economy like production, distribution, consumption and exchange. Naturally, a functioningeconomic system is vital for a healthy society, as the consumption of goods andservices, and the facilitation of this by a common medium of exchange, play amajor role in allowing people to realize their material and other goals inlife. It is a unique system of social security. One major outcome of the Islamic laws of inheritance, is to prevent concentration of wealth. It is only in loans and debt obligations that are outstanding that time related increase is not allowed. As regards the allocative function, interest will play the role of an efficient allocator only in a market that is perfectly competitive, and where marginal productivity of every project is perfectly known and comparable to the going interest rate. Freedom is a cornerstone in the Islamic economic system. It has been narrated from the prophet (P.B.U.H), that loan recipient is more likely to be in need than one who receives Alons. It can't be claimed, therefore, that they will have a different effect on saving. These are following…. The Holy Prophet (peace be upon him) says, Ask ALLAH to help you and don’t feel incapable for nothing is impossible. Qur’an says: “Beautiful for mankind is love of the joys (that come) from women and offspring, and This riba, is prohibited to edge against from principal mode of usury, which is riba of debt. Unlike the capitalist system, the right to property is not absolute but has limitations and qualifications enforced not by the power of the government but by the power of one's faith and desire to be a pious Muslim. Prostitution and income generated by its. As a complete way of life, Islam has provided guidelinesand rules for every sphere of life and society. To attain “more” efficiency, resources have to be allocated in the economy in such a way as to attain the maximum overall return (rate of growth for the economy). This year has been named the year of “Surge … Because too much saving may be just as unproductive as too little, interest rates, furthermore, provide a tool for policy as regards savings where this rate is controlled in such a way as to attain the right magnitude of savings as required by the going economic circumstances. However, the reward will be contingent on the performance of the fund users, i.e. Since economic development is the objective of every society, improving the nascent rate of saving becomes a basic requirement for the achievement of a viable and sustainable economic growth. global Islamic economy,unlocking commercial opportunities. Their argument is that part of the price was related to time. Since returns will significantly increase in a PLS system, more risk will be tolerated by depositors, because it is then compensated for by higher rate of return. The revenues of Islamic state comes form Zakat and Usher. Even in a capitalist economy, the rate of interest is not the “raison d’être” of saving. Between the 9th and 14th centuries, the Muslim world developed many advanced concepts, techniques and use in production, investment, finance, economic development, taxation, property use such as Hawala, an early informal value transfer system, Islamic trusts are known as waqf, systems of contract relied upon by merchants, a widely circulated common currency, cheques, … Basic Characteristics of Islamic Investment Modalities, Musharakah as substitute for regular overdraft, Zakat: Not for the Progeny of the Prophet (PBUH), Rate Of Return as a Discount Rate Under Uncertainty, Additional Methods for Dealing with Uncertainty in Project Evaluation, Address on Monetary & Fiscal Economics of Islam, Alternative Proposals to Mobilise Resources for Government Transactions on Interest-Free Basis: Pakistan, Changes Taking Place in Conventional Economics, Collapse of Communism & Rise of Capitalism, Commentary on Monetary Policy in an Islamic Economy, Comments on Discounting of in Project Evaluation, Comments on Fiscal Policy in an Islamic Economy, Comments on Risk-Bearing & Profit-Sharing in an Islamic Framework, Comments on the Elimination of Interest from Economic and Finance System, Comments on the Financial and Monetary Structure for an Interest Free Economy, Comments on the Foundations of Taxation Policy, Comments on the Objectives of Fiscal Policy, Comments on the Rate of Capitalisation in Valuation Models in an Islamic Economy, Contrasting Islamic & Marxist Positions on Discounting, Discount Rate in the Theory of Corporation Finance, Discounting Under Uncertainty for a Private Investor, Discussion on the Financial and Monetary Structure for an Interest Free Economy, Discussion on Discounting of in Project Evaluation, Discussion on Fiscal Policy in an Islamic Economy, Discussion on Monetary Policy in an Islamic Economy, Discussion on Risk-Bearing & Profit-Sharing in an Islamic Framework, Discussion on the Elimination of Interest from Economic & Finance System, Discussion on the Foundations of Taxation Policy, Discussion on the Objectives of Fiscal Policy in an Islamic State, Discussion on the Theory of Fiscal Policy, Distinguishing Characteristics of an Islamic Economy, Distributional Implications of Interest Receipts & Payments of the Government, Eliminating Interest from Loans to Provincial Governments and other Government Agencies, Evaluating the Proposals to Eliminate Interest from Government Transactions: Pakistan, Facing Globalization: Setting the Muslim Mindset, Malaysia, Financing Government Transactions in an Interest-Free Economy, Financing Govt Transactions in An Interest-Free Economy: A Case of Pakistan, Fiscal Policy, Economic Growth & Development, Globalization The US and the World Dollar, Globalization: MNCs & TNCs: Their Role & Socio- Economic Impact on Host Societies, Globalization: Some Ground Realities & an Islamic Response, Government Expenditures on Interest: Pakistan, Higher Education & Research: Trends & Challenges in a Globalized World, Human Financial Needs & their Fulfillment, Imperialism, Capitalism, Technology & Science, Inaugural Address on Monetary & Fiscal Economics of Islam, Interaction with Shari‘ah Scholars & Economists, Interest Payment to State Bank of Pakistan, International Financial Stability: The Role of Islamic Finance, Keynote Address on Monetary & Fiscal Economics of Islam, Measures of Fiscal Policy in an Islamic Economy, MNCs & TNCs: Emergence, Stakes & Strategy, Need for Justice, Mutual Help & Cooperation: Islamic Approach, Objectives & Instruments of Monetary Policy, Objectives of Fiscal Policy in an Islamic Economy, Positive Time Preference as Basis for Discounting, Practical Options for Central & Commercial Banking, Required Rate of Return in an Islamic Economy, Risk-Bearing & Profit-Sharing in an Islamic Framework: Some Allocational Considerations, Seminar Address on Monetary & Fiscal Economics of Islam, Shadowy Argument for Using a Shadow Interest Rate, Size of Interest Receipts and Payments: Pakistan, Social Integration with Cultural Diversity: Islamic Approach, Sources of Finance for Present Muslim States, Stochastic Productivity of Investment as Basis for Discounting, The Knowledge-Based Economy: Malaysian Response, Theory & Practice of Interest-Free Banking, Three Levels of Interventions: MNCs & TNCs, Unification of Mankind & Globalization: Islamic Approach, Workers’ Participation in the Income Risks of the Firm, Pakistan Supreme Court Response to Challenges, Issues in Pakistan Supreme Court Response, Legal and Practical Constraints: Tabung Haji, Issues of Implementation: Zia’s Nizam-i-Mustafa, Structural Reforms in Pakistan's Legal System, Procedural Reforms: The Qanoon-i-Shahadat, Zia's Raj: The Politics of Prudential Islamization, The Objectives Resolution & Pakistan’s Constitutions, Relevant Case Law, For & Against: Supra-Constitutionality, The Fate of Tenants' Right to Pre-emption: Pakistan, Judicial Activism After Zia: Riba Elimination, Educating the Public on the Merits of Interest-free Economy, The Faisal Case: Findings and Implications, The Variables and Nonvariables in Legal Thought, Global Peace & Justice: An Islamic Perspective, Global Peace & Justice: The Christian Perspective, Development of Modem International Law in the West, Socio-Economic Justice: its Place in Islam, Justice: The Role of Moral Values, Government & the Hereafter, Legal Framework for an Islamic Financial System, Review of Pakistan Federal Shari’ah Court Judgement on Riba, Selection Criterion for Shari’ah Advisory, Shari’ah Parameters for Islamic Finance Contracts, Shari’ah Investment Guidelines for Private Equity, Methods to Finance Alternative Mechanisms, Specialised Financial Institutions: Pakistan, Central Banking & Monetary Policy: Pakistan, Interim Report on Elimination of Interest, Islamic Financial Intermediaries: Malaysia, Non-bank Islamic Financial Intermediaries: Malaysia, Legal and Practical Constraints: Bangladesh, Achievements, Impacts and Prospects: Bangladesh, Principles of Distribution of Profit to Mudarba Depositors, Current Approach to Interest-Free Financing, Prospects for International Transactions Without Riba, Criteria for Appraisal from the Riba Angle, Islamic Position of Foreign Exchange Transactions, Need for Four-Pronged Effort: Riba Elimination, Promotion of a Riba-Safe Business Environment, International Transactions at Government Level, Evolution of the Concept & Practices: Islamic Banking, Current Status of Islamic Financial Institutions Number of IFIs, Experience of Islamic Banks: Some Conclusions, Achievements & Failures: Pakistan Financial System, Present State of the Islamisation of the Financial System in Pakistan, Profit-Sharing Arrangement with Depositors, Islamic Instruments for Secondary Reserves, Central Bank’s Role as ‘Lender of the Last Resort’, Inter-Bank Flow of Funds or Inter-Bank Call Money, Riba-Free Alternatives in Commercial Banking, Islamic Financial System: A Brief Introduction, Role of Mudarba Floatation’s in Pakistan’s Capital Markets, Islamic banks as financial intermediaries, Shari’ah Maxims Relevant to Islamic Banking, The Role of Shari’ah Advisors in Islamic Banking, Limits to Shari’ah board participation in the day to day business of an Islamic bank, Handling Delinquency and Default in Islamic Banking, Shariah-Compliant Models for the Deposit Insurance System, Shariah-Compliant Structures for a Deposit Insurance Scheme, Investment in Islamic Financial Instruments: Tabung Haji, Investment in Land & Building: Tabung Haji, Equity Funds - Guarantee of capital of the fund by the manager, Child Labour: Nature, Concerns, Reasons & Elimination Measures, Educational Institutions & Education System, Indifferent Attitude of Parents & Society, Absence of Any Formal Social Security Mechanism, Revamping School Education & Vocational Training, Elimination Projects & Rehabilitation of Child Labour, Welfare & Production: A Sequential Approach, Broad-Basing of Growth for Poverty Reduction, Tax structure, Public Expenditures & Poverty Alleviation, Trends in Rural & Urban Poverty: Pakistan, Growth & Unemployment in Historical Perspective, An Evaluation of Public Strategies & Policies, Pakistan Poverty Assessment: The World Bank Document, The Question of Policy, Poverty and Society, Poverty Alleviation & Social Action Programme, Poverty Alleviation & Income Distribution – The Malaysian Way, Poverty and Economic Inequality: Malaysia, Progress in Poverty Eradication: Malaysia, Progress in Income Distribution: Malaysia, Historical Perspective Reference to the Ottoman Case, Prohibition of Barter & Pilgrimage: Ottoman Case, Islamic Development Bank: Role in Member Countries, Impact of Zakah & Ushr on Poverty Alleviation, Contribution of Zakah & Ushr to the Average Disposable Income of Lower-Income Deciles, Waqf Centralization: Ottoman Empire & Turkey, Waqf Crisis: Late Ottoman Era and the Republic, Survival & Restoration of Waqfs in Turkey, Comments on Pakistan Supreme Court Judgement on Riba & Tabung Haji, Islamic risk management: types, trends & issues, Direct Investment and Islamic Syndication, Properties of Money in Islamic and Conventional Settings and the Effect on Society, Classification of Islamic Modes of Contract, Islamic Banking Can Save Capitalism (Part 1), Islamic Banking Can Save Capitalism (Part 2), The Role of the Central Bank in Islamic Banking, Sukuk and Tawarruq Contracts in Islamic Finance, Hire-Purchase (Leasing) in Islamic Finance, Example of the Harmful Effect of an Interest-Based Economy (United States), Going Back to the Basics with Islamic Finance, Society and Cooperation in Islam: Incentives and Consequences, Speculation, Uncertainty, Interest, and Unemployment, Conventional Bank as Loan House vs Islamic Bank as Finance House, Islamic Money and Banking: Integrating Money in Capital Theory, IRR (Internal Rate of Return) and Investment Project Appraisal, How Islamic banking narrows the gap between the rich and poor, A Legal Perspective Towards Islamic Finance, Speculation and on Demand for Money in an Islamic Economy, Difference between Islam, Capitalism and Socialism, Factors of Productions in Islam: Capitalist View, Factors of Production: The Socialist View, Definition and classification of Musharakah, This website uses cookies to improve services, analyse traffic to our site, deliver content and provide tailored ads.