Question

discusse the relevent of lslamic finincial system from social and ethical prespective?

Answer 1

Islamic financial system or Islamic banking system is one which prohibits collection of interest by lenders from borrowers and collection of interest from investors. These banks make profits when the borrowers who lend money return back a part of the profits earned by them thus creating a system of equity participation. Thus, if the borrower defaults or his/her business does not make a profit, the bank also suffers loss. Also, investment in any of the prohibited items in their religion is also not permitted.

Apart from Islamic banks, many of the commercial banks have also started Islamic windows wherein they provide such services to consumers.

If we look at it from the economic point of view, it might seem like a very backward concept but from the social perspective, we can argue that money here is not treated as an end in itself but a means to achieve the main priorities like employment, health and education. So, from this view point, such finance is definitely working very well.