Islamic Finance

The Islamic banking and finance sector is a field that has to be seen in the broader framework of an Islamic economy. In the Islamic banking and finance world, the benefits of tangible economic efforts are shared, as are the risks associated with these efforts. Interest is forbidden, as are dealings in un-Islamic practices such as weapons of mass destruction. Furthermore, one cannot sell that which one does not own. Thus, short selling is prohibited. There are an estimated $60 to $80 billion dollars in the Islamic banking sector. The ranks of Islamic firms are growing.

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Pakistan's Federal Shari`a Court has issued an extensive 564 page judgment on the issues associated with interest. The new judgment strikes all the previous regulations that deal with interest-associated clauses. As such a deep change, the judgment is unprecedented in Pakistani history. It is a direct work and it does not skirt the contentious issues at hand.

Whereas development can be understood in many ways, economists consider development to be a rise in per capita income. A developed economy differs from an underdeveloped one typically in economic factors and in non-economic factors as well.

While the most commonly mentioned recipients of zaka funds are the poor and needy, the individuals who collect and distribute the zaka also get revenue from the fund. The payment of these people with zaka money is sanctioned in al-Qur'an.

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The author presents as a model for Islamic economies the city of Madinah--one in which there was much expansion both during and after the life of the Prophet. In an Islamic economy, growth is not the ultimate goal--rather it is the means by which a total improvement in the people's lives may be achieved. A central hypothesis behind the paper is that economic growth in an Islamic economy depends on both physical factors and spiritual factors.

The Islamic Development Bank (IDB), based in Jeddah, has recently embarked on a number of projects that will greatly influence the Islamic finance sector. The Islamic Research and Training Institute (IRTI), the research and the London market. IDB is also planning to play a larger role in project and development finance. IDB must strengthen its initiatives on

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