EconPapers    
Economics at your fingertips  
 

Summary and Conclusions

Munawar Iqbal and Philip Molyneux ()
Additional contact information
Munawar Iqbal: Islamic Development Bank

Chapter 10 in Thirty Years of Islamic Banking, 2005, pp 152-156 from Palgrave Macmillan

Abstract: Abstract Islamic banks emerged on to the financial scene in early 1970s. During the last 30 years the Islamic financial industry has shown remarkable progress both from a theoretical and practical perspective. Even though Islamic banks emerged in response to market needs of Muslim clients, they are not religious institutions. Like other banks, they are profit-seeking institutions. However, they follow a different model of financial intermediation. The most important distinguishing feature of the Islamic banking model is the use of risk-sharing modes of finance. Islamic scholars working with practical bankers have developed a number of such modes, including muḍārabah, mushārakah, murābaḥah, salam, istiṣnā‘, leasing and ṣukūk. Salient features of all of these modes have been discussed in this book. In the Islamic theory of contracts of exchange, the general rule is that of permission. Every contractual arrangement is permissible unless expressly prohibited by Sharī‘ah. There are very few prohibitions. Basically, these are covered under two categories: ribā and gharar. These terms have been described in detail. Based on the Islamic theory of financial contracts, guidelines for Islamic financial engineering have been derived. These can be summarized in what we have called the four Cs of Islamic financial engineering: consciousness, clarity, capability and commitment: Consciousness: the parties should consciously and willingly agree on the conditions of contract without compulsion or duress. An implication of this is that any agreement made in a state of unconsciousness (such as under the influence of intoxicants or imposed by force is not valid).

Date: 2005
References: Add references at CitEc
Citations:

There are no downloads for this item, see the EconPapers FAQ for hints about obtaining it.

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:pal:pmschp:978-0-230-50322-9_10

Ordering information: This item can be ordered from
http://www.palgrave.com/9780230503229

DOI: 10.1007/978-0-230-50322-9_10

Access Statistics for this chapter

More chapters in Palgrave Macmillan Studies in Banking and Financial Institutions from Palgrave Macmillan
Bibliographic data for series maintained by Sonal Shukla () and Springer Nature Abstracting and Indexing ().

 
Page updated 2025-03-31
Handle: RePEc:pal:pmschp:978-0-230-50322-9_10