Islamic Finance

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A comparative and mathematically rigorous look at an Islamic financial system based on a variable-return scheme (VRS) verses one based on a fixed-return scheme (FRS) shows that under certain assumptions, such as risk aversion by investors, the Pareto-optimal contract occurs under a variable-return scheme. The reason: a VRS spreads risks far more equitably. In the contemporary world, FRS dominates, in the form of debt contracts. VRS monitoring costs are not prohibitive.

Qur'anic economics and orthodox economics may be integrated under the concept of utility maximization. Under a rational-choice principle of economics based on maximization, iman is the guiding principle of a rational

Indonesia and Malaysia have made serious attempts to liberalize their economies in recent years so market forces may play a more active role in the allocation of resources. An assessment of the extent of state intervention in Indonesia and Malaysia may be made by examining the policy environment in these countries and the nature, content, and impact of their economic policy reforms. Some policy lessons may be drawn from the analysis.

Western and Islamic societies have modern social security systems and certain means of dispensing benefits. The ultimate aim of all societies is to maintain a stable and viable social security system for the community's populace. Social security, capitalism, socialism, and social security in

Econometric modeling shows that the rate of interest does not have any significant influence on the demand for money and on the investment function in a contemporary Islamic society. Money demand in

The history, philosophy, and goals of Islamic banking may be examined using a comparative analysis of different marketing developments and using an analysis of the degree of applicability between Islamic and conventional banks. The Islamic and conventional banking systems can learn from each other. While conventional banks might come up with mudarabas, musharakas, or other products utilized by Islamic banks, Islamic banks can learn marketing techniques regarding strategic planning, research, and other matters from conventional banks.

Interest has a certain role and some consequences on society. A radical change must occur in society to create an economy without any interest. The Islamic theory of capitalism is a realistic one because the production of capital is related to real output. This theory is also a comprehensive one, because of the great number of factors it takes into account, and an ethical one, because there must be equity and no exploitation.

While Islamic banking has continued to increase in popularity, there has been an insufficient level of research being conducted on these Islamic institutions. To promote research into this area, Harvard University has initiated the Harvard Islamic Finance Information Program (HIFIP), a program that aims to be the largest source for data on Islamic banking and finance. HIFIP has developed a database containing historical and contemporary information on Islamic banking. The Islamic Investment Company of the Gulf (Bahrain) has provided sponsorship to the program.