Economics and Business

Economics and Business

Towards an Interest Free Islamic Economic System

The author, who is chief economist at the Banker's Equity Limited, an interest-free institution in Pakistan, earned his Ph.D. in 1983 from Boston University. This book, a revised version of his doctoral dissertation accepted at that university, is the first publication sponsored by the International Association for Islamic Economics in collaboration with the Islamic Foundation. The study contains important lessons for both interest-bearing and the interest-free Islamic societies. Theoreticians and practitioners in finance can equally benefit from this timely publication. It is therefore a very useful addition to the literature in Islamic economics and in the "signalling theory" in finance, which are both new and fast growing areas of study.

The Micro-Economics Foundations of Islamic Economics: A Study In Social Economics

  1. Objective of this Paper

The main objective of this paper is to show the relevance of ethical or normative elements in economic theory. The paper builds on the exchange mechanism of economics as the ethical basis of the social order and shows that an ethical economic system must be capable of infinitely reproducing this exchange mechanism in the rational working of the total social system through higher and higher levels of social preferences.

In building up this analytical framework of ethical economics, we study the field of social economics in general and of Islamic economics in particular as a field of social economics. Through this we introduce a re-conceptualization of ethical economics in terms of the fundamental microeconomic building blocks. The premise of the argument therefore is that since the exchange mechanism is the instrument of transmitting ethical preferences, it is the microeconomic foundation that is capable in the first place of building up the ethical economic order as a whole. The ethical macroeconomic system depends upon aggregations at the microeconomic level.

The Islamization of Knowledge and Some Methodological Issues in Paradigm Building: The General Case of Social Science with a Special Focus on Economics

The need for the Islamization of knowledge as a means to revive the leadership of the Islamic Umma in the world has been explained over a period of many years by Dr. ‘AbdulHamid ’AbliSulaymian. A clear conceptualization of this Islamization, based on Tawhid, was first proposed by Professor Isma‘il Raji’ al Faruqi in 1982 and presented as both a theoretical paradigm and a practical scientific research program.

Both the theory and program have been attacked as unscientific, because they are not descriptive but rather are normative. They call for the reorganization of knowledge into a new framework that does not grow out of the old secular framework of modem thought. Furthermore, Professor al Faruqi’s paradigm and praxis call for the pursuit of value-laden goals, that is, for the “ought-to-be” not only as an end in itself but as a guide and methodology for the study of what “is.”

The Shari'ah and its Implications for Islamic Financial Analysis: An Opportunity to Study

By far the majority of articles in the world's leading accounting journals take as given the culture and religions of the Western world. Articles appear from time to time that make distinctions among accounting practices in different Western or ex-Commonwealth countries, but in so doing there is usually no need to re-examine whether the basic building blocks of accounting and finance are consistent with the cultures of those countries; that is taken as self-evident. A few authors have pressed further to show that it is inappropriate to impose unmodified Western accounting practices on developing countries,' while many others have illustrated the difficulties in harmonizing international accounting standards when they have to be applied to countries with different environmental business and social foundations .

Islamic Justice In A Monetary System: A Modest Proposal

Dr. M. Umer Chapra. Towards a Just Monetary System. Leicester: The Islamic Foundation. 1985. 292p.

Extensive literature on the institutional aspects of monetary economics includes pioneering studies by Muhammad Uzair, Muhammad Nejatullah Siddiqi, Ziauddin Ahmed, Anwar Iqbal Qureshi, Afzalur Rahman, and the Council of Islamic Ideology in Pakistan among many others. Scores of research papers have elaborated the functioning of Islamic banking in theory and practice. A fresh study on Islamic banking in Iran and Pakistan by Zubair Iqbal and Abbass Mirakhor has been released by the International Monetary Fund. In the voluminous literature on issues dealing with money and banking in Islam, Towards a Just Monetary System is outstanding in many respects.

Reorganization of Islamic Banking: A New Proposal

Traditional banking is rejected by Islamic scholars mainly because of interest. Interest-bearing banking is supposedly being replaced by profit-sharing banking organized on the basis of two-tier mudaraba. Seigniorage (difference between face value and intrinsic value of money) resulting from expansion in demand deposits will continue accruing to the interest-free banking system. Islamic economists consider it unjust to leave the seigniorage in the hands of private banks.

Money experts feel strongly that the seigniorage should be transferred to society by financing welfare projects. A dual banking scheme is proposed here that will accomplish this task and contribute towards achievement of some other socio-economic goals of an Islamic society. The major role of banking for an economy is presented in section I.  Interest free banking is outlined in section II. Dual banking scheme, with its justification and socio-economic implications, is proposed in the final section.

Meeting the Needs of Islamic Finance at the Undergraduate Level: The Double Degree

B.Economics (Hons.) with Concentration in Finance/Islamic Economics and B.Islamic Revealed Knowledge and Heritage


It has now been accepted by nearly all scholars that in order to produce the type of human resources needed to develop the discipline and practice of Islamic economics, banking and finance, we have to have curricula that integrates between our Islamic heritage and modern economics/finance. In this brief note, we will try to present the double degree effort introduced in the last decade at the Department of Economics, IIUM, that was an additional step seen to be necessary to make a more meaningful contribution to the development of Islamic economics, banking and finance.

Teaching Islamic Economics in Malaysian Universities: Lessons from the Department of Economics, IIUM

Islamic economics, in both theory and practice, has been an area of discussion and debate for the last three decades. While literature on Islamic economics, particularly Islamic banking and finance, has increased tremendously in the last two decades, one very neglected area has been in Islamic economics education.  This paper tries to fill this gap by discussing and analyzing the ‘Islamic economics curriculum’ at the Department of Economics, Kulliyyah of Economics and Management Sciences (KENMS), IIUM and how its 25 year experience could provide some insights and lessons for curriculum reform in Malaysian universities.

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