Investing in Shares From an Islamic Point View

Consecutive shortcomings and failures of financial markets along with the moral hazards have created a demand for an alternative system for financial markets in both the Muslims and non-Muslims secular societies in the West and East. The paper investigates possibility of applying Islamic finance principles on investment opportunities available to Muslim communities living in either Muslim or non-Muslim countries which are predominated by conventional secular systems economically and financially, it takes stock of the views of contemporary scholars regarding consistency of Islamic finance principles for investing in shares of joint stock companies. It examines the roles that had been played by Islamic finance and Shari'ah scholars to present investment opportunities for those who are with surplus funds but with limited opportunities for investment due to Shari'ah concerns. It details the role of modern science in easing economic life of people by developing techniques catering to the Shari'ah compliance requirements. Eventually, the paper applies, compare and contrast approach over the methods and techniques adopted for devising the indices classifying the shares as Shari'ah compliant or otherwise. the paper concludes on finding the point of strength as well as gaps in the existing indices for Shari'ah compliance of shares.