Islamic Finance

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A debate exists on the Islamic permissibility of various forms of insurance. Mutual insurance in

Islamic jurists are averse to profit sharing and risk. Insurance appeared in Arabia in the 18th century. Ibn Abidin, a Hanafi scholar, first investigated the nature and legality of insurance that thought it impermissible. The concept of abstract legal acts is not really a part of Islamic legal thought.

While insurance per se is not contrary to

Insurance has a central place in the modern economic system. The chambers of commerce of various Islamic countries have, in conference meetings, discussed cooperating on insurance and reinsurance. Uncertainty is an element of life. With increasing complications in the economic system, more risks exist and need to be handled with advanced methods. Insurance gives financial assurance. It does not aim to keep disasters from happening; it seeks to protect individuals from the consequences of these disasters. Islamic scholars contend that

The creation of the Muslim Business Development Centre in Manchester, U.K., was supported by the

The House Building Finance Corporation underwent some changes and saw results. The Pakistani firm began in 1952 primarily to aid the masses of refugees that came to Pakistan after its independence. The corporation's focus was first Karachi and then spread to other regions of the country. Both the federal and provincial governments appoint the directors of the firm, while the managing director is federally appointed. Although the firm had previously depended on interest-bearing loans from the State Bank and had itself made loans at interest, it now operates on an income-sharing scheme.

Iran and Pakistan both have resolved to adopt Islamic economies -- Iran has rapidly transformed its system, while Pakistan is moving gradually and has begun the conversion with the banking industry. While some had feared that Islamization of the economies would cause a terrible breakdown in the financial system, time and evidence have proven their worries unfounded. To the contrary, there has been a quick increase in private-sector deposits in both Pakistan and Iran, suggesting that Islamic economics can successfully invest a society's assets and galvanize a nation's economy.

A decade-long comparison of the Islamization of the banking systems in Iran and Pakistan aims to uncover the similarities and differences in the experiences of the two countries. Iran's drive to conform to Islamic practices is more powerful than Pakistan's. The Pakistani banking industry has not been innovative enough in developing Islamic financing methods, and bank privatization in Pakistan may make compliance with Shari`a more complicated.