Islamic economics and finance has emerged as a discipline separate from the general science of economics and finance in the wake of islamisation of Islamic business industry. It is a system of finance that is bound by religious laws that prevent the taking of interest payments which in Arabic called Riba. Islamic economics and Finance is broader term which includes a banking system that isÂ based onÂ the principles of Shari’ah and guided by Islamic principles. Two basic principles behind Islamic bankingÂ are sharing of profit and loss and, significantly,Â the prohibition of the collection and payment of interest. Collection and payment of interest is strictly prohibited in Islam. If it is prohibited to take, it is also prohibited to give. Islamic Economics and Finance has many operational areas like Islamic banking, Islamic Investment, Islamic real estate, Takaful/Insurance, Asset Management etc. The elimination of interest from the economic system is meant to “promote economically just, socially fair, and ethically correct dealings according to Islamic principles, foster the solidarity and cohesion of the Muslim ummah, harmonise trade, create powerful economic incentives, and bring about cooperation and co-participation in all walks of life.” In formulating its fundamental principles, Islamic economics system seeks to fuse Islamic religion with economic science; that is, it tries to combine the study of economic phenomenon of ordinary business of life with religious beliefs, ethical norms, moral ideals, rules and laws, thus putatively believing that the social science of economics is a secular discipline which does not concern itself with value judgements, and that Islamic economics is a plausible alternative to modern economics since it is based on the values, norms and principles of Islam.
Islamic economics and finance is as old as Islam itself. Throughout the fourteen centuries of Islamic history, we find a continuity of works in which economic issues are discussed in the light of the Shari’ah. Most of these discussions lay buried, however, in the vast literature on the exegesis of the Qur’an (that is, Tafsir), commentaries on Hadith, principles of jurisprudence (usul al-fiqh), and law (fiqh). No effort has been made to dig out this material and present it systematically. There is another genre of works devoted exclusively to statecraft and social organization. These and the works on moral philosophy and historiography received some attention when the new born social sciences entered the curricula of universities in the Muslim world and scholars started looking for the Islamic heritage in these fields. Some orientalists have also paid special attention to the political and economic thought of early Muslim thinkers. But we do not have, till date, a single comprehensive book on the history of economic and finance in Islam. We do have, however, a number of papers, mostly written after the middle of this century, on the economic thinking of some eminent Islamic scholars in the past. Let’s discuss a little about its journey so far.
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