Essay About Islamic Finance And People Belief

Islamic Case
Islamic finance is based on Shar’iah. As we all known the Shar’iah is Islamic law, it protects faith, life, intellect, family and property. When people belief in some divine guidance, it obviously will affect him/she be more honest, less cheating, do more good things, and avoiding do some bad things. If people have belief, they would not only focus on their own benefit even to hurt someone else. Using in trading, the traders are not only focus on how much the profit they can gain, but also focus on how rational and equitable the business is. Besides, in Islamic concepts, earning of wealth should in a moral and ethical manner.(Muhammad 2008) The principles of Islamic finance pay attention to fair trade, clarity, accuracy and the rights of all parties involved.(Joseoh, Antoine 2009:21) Additionally, the Shar’iah principles also designed to avoid unethical practices.

The most different from conventional finance is Islamic finance encourages interest free and usury is prohibited. In other words, Islamic finance forbidden Riba when they financing.The absence of interest rate would contribute to a financial system based on equity and with less interference from central authority, which often uses the interest rate to affect the economy (Joseoh, Antoine 2009). In Islamic finance, any excess on capital gained without investment in productive economic activity is Riba. For example, debt with interest are not allowed, instead that, profits, losses and risks sharing are encouraged between the financers and bank. Interest free is fairer, comparing with conventional finance, for both borrower and leaser.The victims of bank interest, many western conscience economists have already discovered and unraveled. Sidney,H (1967)pointed out it in his book, criticizing the capitalistsuse interest rates to exploit the social ‘history’ cruelly.Without doubt, the interest or Riba as an important role in the conventional finance activities in current. However, interest will meet some people who has desire of earing money without doing anything, it leads huge wealth concentrate in small numbers of people especially in the third world countries.For example, amount of people deposit their money into bank due to the interest, it leading a large proportion of cash in the bank, then bank lease this huge amount of money to small number of people such as invest institutions, munitioners and land agents to get high profits by high interest rates.Such highly concentrated wealth leads to a serious Imbalance in the distribution of social wealth. Hence, the small numbers of people who hold this huge numbers of money transfer the target of expoitation to the majority of people. For instant, the wealth deposit large amounts of money to banks, then they will get more back, however, the poor has no money to deposit, then they will get back nothing. It’s ridiculous and unfair. It seems that interest takes people into a vicious cycle that the poor will be exploited