Optimum investment decisions: an Islamic perspective

The article, primarily interested in microeconomic theory and formulation, seeks to illustrate the factors that go into the consideration of a Muslim when making his or her investment choices. As individual members of the Ummah, Muslims are mandated to work for a living; as a whole society the Ummah is responsible for taking care of the needy within it. The article discusses the place of zaka in an Islamic economy. The practice of sharing profits and losses is addressed, and the term mudaraba (trust financing-- also referred to as qirad ) is introduced. A technical and formulaic view of a Muslim's financial choices is offered and the discussion culminates in the presentation of the theory in graphic form. The author sees Muslims as interested in seeking maximum falah (success) both in earthly life and in the afterlife. This two-sided goal leads to the rationale on which the author builds his microeconomic optimal choice model.