economy in islam

Question 1

economy/iqtisaad

Answer 1

moderation in human action especially in wealth spending

Question 2

characteristics of islamic economy

Answer 2

1. ethics
2. balance between capitalism and socialism
3. distribution of wealth and prohibition of amassing it
4. all wealth belongs to Allah and man is only his ambassador
5. lawful means of wealth acquisition

Question 3

what is islamic banking

Answer 3

the operating of financial institutions based on islamic law/sharia in all its activities as an intermediary between investors and depositors.

Question 4

history of islamic banking

Answer 4

• the muslim word economy was based on islamic sharia until 1924 when the occupation era introduced Riba (interest)
• 1963: dr. ahmad al najjar (chief of islamic banking and an egyptian economist) found a solution
• 1971: bank al nasr was founded
• 1975: islamic develpment bank in jeddas was founded (IDB)
• 1975: dubai islamic bank was founded (DIB)

Question 5

characteristics of islamic banking

Answer 5

1. total compliance with islamic law
2. interest-free transactions
3. profit and loss are shared by the bank and client
4. real economic growth

Question 6

what is usury riba?

Answer 6

the practice of making immoral loans intended to enrich the lender.

Question 7

what is capitalism and socialism?

Answer 7

capitalism is a system based on individual wealth and private ownership.

socialism is a system based on common ownership where individuals are not allowed to own vital sources of wealth.

Question 8

principles of islamic economy

Answer 8

1. fair distribution of wealth
2. social justice (zakat)
3. legal and ethical acquisition of wealth

Question 9

Some economic rules in Islam

Answer 9

1. Interest rate on loans is prohibited
2. Do not sell what you do not own
3. Delayed payment is allowed
4. Do not force borrowers to pay you back when they can not.
5. When you are involved in a trade, you should accept risks the same way you accept profits.

Question 10

modes of islamic financing

Answer 10

1. Mudarabah/profit sharing: a contract between two or more parties where one partner gives money to another for investing it in a project while the other party contributes with work or expertise.
2. Murabaha: a particular type of sale where the seller
   expressly mentions the cost he has incurred on the products for sale and sells them to another person by adding some profit, which is known to the buyer.