Hasan, Zubair (2005): Islamic banking at the crossroads: theory versus practice. Published in: Rodney Wilson and Munawar Iqbal (Ed.): Islamic perspectives on wealth creation, Edinbourgh University Press, UK (2005): pp. 11-25.
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This paper examines the reasons for a widening gap between the conventional theory and current practice of Islamic banks. It finds fault at both the ends. ’No risk, no gain’ is inadequate as a general principle for organizing Islamic finance. It is also not always valid to say that Islam is averse to granting of a time value for money. The overuse of deferred contracts in Islamic finance threatens to violate the juristic principle of sadd al-dhara’i i.e. controlling the potential avenues for circumvention of the law. Some structural changes in Islamic financial arrangements are suggested to create a balance in the use of PLS and deferred contracts in Islamic banking.
|Item Type:||MPRA Paper|
|Institution:||International Islamic University of Malaysia|
|Original Title:||Islamic banking at the crossroads: theory versus practice|
|Keywords:||Islamic banking theory Malaysia|
|Subjects:||G - Financial Economics > G2 - Financial Institutions and Services|
|Depositing User:||Zubair Hasan|
|Date Deposited:||19. Apr 2007|
|Last Modified:||11. Feb 2013 16:29|