Islamic Finance: Difference between revisions

From WikiIslam, the online resource on Islam
Jump to navigation Jump to search
[checked revision][checked revision]
mNo edit summary
No edit summary
 
(9 intermediate revisions by 2 users not shown)
Line 1: Line 1:
{{QualityScore|Lead=1|Structure=1|Content=2|Language=1|References=1}}
{{QualityScore|Lead=1|Structure=1|Content=2|Language=1|References=1}}Estimates about the world's total Muslim population range between 1.2 and 1.6 Billion. Most countries in the Islamic world are, on average, less developed than non-Muslim countries, with only a small percentage of all Muslims living in those which can be considered developed, the wealth of which countries depends to a large extent on oil (such as Saudi Arabia) and other natural resources or have undergone a period of significant secularisation (such as Turkey). There may be various complex and historical factors involved, arguably including those relating to religion.
==Introduction==


Estimates about the worlds total Muslim population range between 1.2 and 1.6 Billion. Most Islamic countries are, on average, less developed than non-Muslimcountries. Less than 5% of all Muslims are living in Muslim countries which can be considered developed. However, the wealth of all these rich, developed Islamic countries depends largely on oil. Moreover, many Muslims living in developed countries live in Western non-Muslim countries. In fact, one-third of young Muslims in Kosovo (the most recently established Muslim State) are already looking to emigrate in search of fortune elsewhere (i.e. The West). This should not come as a surprise, with 73% of their young being unemployed.<ref>[http://www.ansamed.info/en/news/[email protected] Kosovo: young; 73% unemployed, one third prepared to emigrate]</ref>
==''Haram'' (prohibited) institutions==


Many Islamic economies depend on agriculture, raw materials or textile products, with little or no production of sophisticated products. There are almost no high tech products originating from an Islamic country.  
===Illegal trades===
Alcohol, pork and gambling are agreed upon to be forbidden under [[Islamic law]] and Islamic financial institutions avoid investing in such activites. Similarly prohibited is the charging and collecting of interest.


For example, Malaysia is the only Muslim-majority country with a significant electronic industry. However, most products produced in Malaysia derive from production facilities built by foreign manufacturers. Thus, capital and technology are imported from western or East Asian multinationals.  
===Interest-based practices===
Of the economic practices prohibited by Islamic law, the prohibition on interest is the most consequential, since all banking, financing and investing in the world´s economy depends on interest.


In some countries with Muslim majority, such as Indonesia and Malaysia, minorities enjoy a significant influence on the national economy. Therefore, many Islamic governments are suppressing such minorities to keep limit their influence upon their national economies.
[[Islam]] traditionally prohibited interest, as [[Muhammad]] feared usury leading to debt-[[Qur'an, Hadith and Scholars:Slavery|slavery]] and other undesired social problems. However, modern laws increasingly prohibit and secure against debt-slavery, and it would appear that interest has a net-positive effect on the global economy today, as it enables every sort of loan.


==Haram Businesses==
Nevertheless interest remains forbidden in many Islamic countries and many small or medium sized companies cannot find any investor to expand their business. 
==''Halal'' alternative institutions==
There are, however, Islamic banks existing in many Muslim (and Western) countries from which financing is available. These include savings accounts which return a share of invested profits instead of interest.


Alcohol, pork and gambling are agreed upon to be forbidden under [[Islamic law]]. Similarly prohibited is the charging and collecting of interest.
Alternatives to mortgages are offered in which the property is owned jointly with a bank, in what is called a ''musharaka'' (partnership) contract, gradually repaying the bank for its share of the property and paying fees in the meantime. Business loans can also take the form of ''musharaka'' contracts in which the bank does not charge interest but gets shares in the business to share in the profit (and risk of loss) resulting from the loan. However, many companies would prefer a western bank to fulfill their financial needs and stay independent from an investor with such requirements.


Of the economic possibilities thus limited by Islamic law, the prohibition on interest is the most consequential, since all banking, financing and investing in the world´s economy depends on interest.
==Production in Muslim-majority nations==
Many Islamic economies depend on agriculture, raw materials or textile products, with little or no production or design of high value-added products.


[[Islam]] traditionally prohibited interest since it feared of usury leading to debt-[[Qur'an, Hadith and Scholars:Slavery|slavery]] and other undesired social problems. However, modern laws increasingly prohibit and secure against debt-slavery, and it would appear that interest has a net-positive effect on the global economy today, as it enables every sort of loan.
Malaysia is the only Muslim-majority country with a significant electronic industry. Most products produced in Malaysia derive from production facilities built by foreign manufacturers. Thus, capital and technology are imported from western or East Asian multinationals.  


There are also Islamic banks existing in many Muslim countries, however, many companies would prefer a western bank to fulfill their financial needs and stay independent from an investor who buys company shares - which is the alternative to interest commonly used in Islamic economies to secure investment/loans.  
There may be opportunity for economic growth and prosperity to improve in the long term with improved education, the growing Islamic finance industry, loosened restrictions on women and fast-growing, youthful populations.


Nevertheless interest remains forbidden in many Islamic countries and many small or medium sized companies cannot find any investor to expand their business.  
===Economic influence of non-Muslim minorities===
In some countries with a Muslim majority, such as Indonesia and Malaysia, minorities enjoy a significant influence on the national economy. Many Islamic governments are suppressing such minorities to keep limited their influence upon their national economies.


==Lack of Education in Islamic Countries==
==Economically detrimental factors==


World Statistics reveal that many Islamic countries face serious problems regarding education.  
===Education===
World Statistics reveal that many Islamic countries face serious problems regarding education. Many Islamic countries suffer from considerably high rates for illiteracy. High population growth rates make public education unaffordable.  


Many Islamic countries suffer from considerably high rates for illiteracy, with little hope that the picture might change. High population growth rates make public education unaffordable.  
Many young boys do not attend school but only "Qur'an-Schools" where they are forced to memorize the [[Qur'an]] without understanding anything of it. Many [[Qur'an, Hadith and Scholars:Women|Muslim women]] are illiterate as a result of patriarchal education laws that prioritize the education of Men. The result is that women cannot pass-on any knowledge to their children, worsening the situation further.


Many boys do not attend school but only "Qur'an-Schools" where they are forced to memorize the [[Qur'an]] without understanding anything of it.
In some cases, Sharia-inspired laws do not allow even well educated women to work or inhibit their careers.


Many [[Qur'an, Hadith and Scholars:Women|Muslim women]] are illiterates because many men think that they do not need education. The result is that they cannot pass-on any knowledge to their children, worsening the situation further.
===Gender segregation===


In other cases, Islamic laws does not allow that even well educated woman work. In Saudi Arabia many women attend university, but they will never find a job because they are not desired to work.
Some Islamic societies fail to harness the economic power of the female half of their populations. Some common restrictions include:


==Gender segregation==
*Women cannot meet male teachers directly.


Islamic societies (for example, in Saudi Arabia, with only slight changes taking place recently) are wasting the power of women.
*Women cannot move or travel anywhere alone.


*Women can never meet male teachers directly.
*Women must be [[Hijab|veiled]].
 
*High qualified but not desired to work.
 
*Cannot drive.
 
*Cannot move or travel anywhere alone.
 
*They must be [[Hijab|veiled]].
 
==Discrimination against Non-Muslims==
 
There are many difficulties for Non-Muslims in Muslim-Societies, including the [[Jizyah]] “poll tax” for dhimmi's:
 
{{Quote|{{Quran|9|29}}|Fight those who believe not in Allah nor the Last Day, nor hold forbidden that which hath been forbidden by Allah and His Messenger, nor acknowledge the religion of Truth, (even if they are) of the People of the Book, until they pay the Jizyah with willing submission, and feel themselves subdued.}}
 
In Malaysia, the Chinese minority effectively controls the economy, but Chinese students have to attain higher qualifications on average compared to local people to acquire the same jobs and scholarships.
 
In addition to endemic instability, this commonly discriminatory environment in many Muslim-Societies is not inviting for foreign investors.
 
==Mismanagement in Iran==
 
Struggling economy,
not enough refined petroleum and protests,
economy controlled by religious foundations
small and medium sized companies with little influence
private sector underdeveloped, key industries under control of the Islamic government, little success in developing of not oil related businesses.
 
Due to dilapidated drilling rigs and pipelines, Iran can only produce 4.3 million barrels of oil/day out the 130 billion barrels of proven oil reserves.<ref>[http://www.telegraph.co.uk/news/main.jhtml?xml=/news/2007/06/28/wiran228.xml Khamenei plays for high stakes],  ''The Guardian'', 28/06/2007</ref>  Furthermore, Iran can refine only 40% of its oil consumption; it has to export crude oil and import refined oil for the other 60% of consumed oil. 
 
High unemployment rates—15% according to the Iranian government <ref>https://www.cia.gov/library/publications/the-world-factbook/geos/ir.html#Econ</ref>. Since population is very young, rate is expected to rise in the future. Many young Iranians want to emigrate<ref>[http://www.reuters.com/article/worldNews/idUSDAH23888120070323?pageNumber=2 Young Iranians dream of better life in the West], ''Reuters'', 23 March 2007</ref>.


==References==
==References==
Line 77: Line 53:
*''Iran's Economic Morass: Mismanagement and Decline Under the Islamic Republic'', ISBN 978-0944029671
*''Iran's Economic Morass: Mismanagement and Decline Under the Islamic Republic'', ISBN 978-0944029671


==External links==
[[Category:Shariah (Islamic Law)]]
 
[[Category:Islamic finance]]
*''[http://cob.jmu.edu/rosserjb/Islam.and.Mammon.Kuran.bk.rev..doc Islam and Mammon: The Economic Predicaments of Islamism]''
[[Category:Society and human nature]]
 
[[Category:Politics and Government]]

Latest revision as of 13:36, 27 November 2023

Error creating thumbnail: Unable to save thumbnail to destination

This article or section is being renovated.

Lead = 1 / 4
Structure = 1 / 4
Content = 2 / 4
Language = 1 / 4
References = 1 / 4
Lead
1 / 4
 Structure
1 / 4
 Content
2 / 4
 Language
1 / 4
 References
1 / 4

Estimates about the world's total Muslim population range between 1.2 and 1.6 Billion. Most countries in the Islamic world are, on average, less developed than non-Muslim countries, with only a small percentage of all Muslims living in those which can be considered developed, the wealth of which countries depends to a large extent on oil (such as Saudi Arabia) and other natural resources or have undergone a period of significant secularisation (such as Turkey). There may be various complex and historical factors involved, arguably including those relating to religion.

Haram (prohibited) institutions

Illegal trades

Alcohol, pork and gambling are agreed upon to be forbidden under Islamic law and Islamic financial institutions avoid investing in such activites. Similarly prohibited is the charging and collecting of interest.

Interest-based practices

Of the economic practices prohibited by Islamic law, the prohibition on interest is the most consequential, since all banking, financing and investing in the world´s economy depends on interest.

Islam traditionally prohibited interest, as Muhammad feared usury leading to debt-slavery and other undesired social problems. However, modern laws increasingly prohibit and secure against debt-slavery, and it would appear that interest has a net-positive effect on the global economy today, as it enables every sort of loan.

Nevertheless interest remains forbidden in many Islamic countries and many small or medium sized companies cannot find any investor to expand their business.

Halal alternative institutions

There are, however, Islamic banks existing in many Muslim (and Western) countries from which financing is available. These include savings accounts which return a share of invested profits instead of interest.

Alternatives to mortgages are offered in which the property is owned jointly with a bank, in what is called a musharaka (partnership) contract, gradually repaying the bank for its share of the property and paying fees in the meantime. Business loans can also take the form of musharaka contracts in which the bank does not charge interest but gets shares in the business to share in the profit (and risk of loss) resulting from the loan. However, many companies would prefer a western bank to fulfill their financial needs and stay independent from an investor with such requirements.

Production in Muslim-majority nations

Many Islamic economies depend on agriculture, raw materials or textile products, with little or no production or design of high value-added products.

Malaysia is the only Muslim-majority country with a significant electronic industry. Most products produced in Malaysia derive from production facilities built by foreign manufacturers. Thus, capital and technology are imported from western or East Asian multinationals.

There may be opportunity for economic growth and prosperity to improve in the long term with improved education, the growing Islamic finance industry, loosened restrictions on women and fast-growing, youthful populations.

Economic influence of non-Muslim minorities

In some countries with a Muslim majority, such as Indonesia and Malaysia, minorities enjoy a significant influence on the national economy. Many Islamic governments are suppressing such minorities to keep limited their influence upon their national economies.

Economically detrimental factors

Education

World Statistics reveal that many Islamic countries face serious problems regarding education. Many Islamic countries suffer from considerably high rates for illiteracy. High population growth rates make public education unaffordable.

Many young boys do not attend school but only "Qur'an-Schools" where they are forced to memorize the Qur'an without understanding anything of it. Many Muslim women are illiterate as a result of patriarchal education laws that prioritize the education of Men. The result is that women cannot pass-on any knowledge to their children, worsening the situation further.

In some cases, Sharia-inspired laws do not allow even well educated women to work or inhibit their careers.

Gender segregation

Some Islamic societies fail to harness the economic power of the female half of their populations. Some common restrictions include:

  • Women cannot meet male teachers directly.
  • Women cannot move or travel anywhere alone.

References

Further readings

  • Iran's Economic Morass: Mismanagement and Decline Under the Islamic Republic, ISBN 978-0944029671
Retrieved from "http://wikiislamica.net/index.php?title=Islamic_Finance&oldid=137696"