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The Essence difference between Islamic Finance and its counterpart?

Güncelleme tarihi: 15 Ağu 2023

Undoubtedly, a lot of analysis of literature reviews, numerous reports, and other documents were produced as well as published regarding this issue. With due respect, the main aims of this analysis are also to figure out some issues in the light of the prime difference between Islamic finance and its counterpart to address and inform various groups of society who are interested in Islamic financial business operations ultimately.

Accordingly, at this moment due to various reasons of that, it is crucial to address the prime features of Islamic financial institutions (IFIs) what they do, and how they do it. Islamic finance (IF) is a business entity like other conventional businesses. The essential difference is not all rounded, but few which is prime in its nature. For instance, the conventional business system allowed any kind of instruments of business activities leads to earn money or generate income in the scope of country law and international agreements broadly. This action has been highly appreciated and encouraged in capitalist mentality and capitalist system to maximize profit at any rate, which helps the system utmost to be always the leader of the globe hubs for long periods in line with globalization essay in particular. And also, capitalist mentality defends that those who make more money or create huge amounts of wealth are considered as a form of more powerful or heroines according to this system. So this mentality promotes huge groups or individuals to full fill their self-interest the way they like by damaging under the name of investment for self-benefit without protecting social values and without eco-friendly or environmental and climate protection through industry acting unethical or immoral to collect much more dollars in the context of to exercise hegemonical power as well.

Albeit, IF is share some features with the convention system not against everything. On the other hand, IF by its nature developmental and it is relying on real economic activities by providing and enhancing productive projects, eco-friendly investment, and climate change protection action as well. Besides, IF discharges also basically some tools and instruments practiced under its counterpart. To mention a few: riba (interest on a loan), uncertainty (Garar), gambling, and business among economic other fictitious products and services like derivative financial instruments. In this context, the income generated from a such contract has no legitimacy in IF. In other words IF not only follow the rules or law of the country but also the Shari'a ruling (Islamic law) which is driven by Divine God. In addition, Islamic law or shari'ah ruling does not allow a kind of income-generating from what you do not own. Thus, before earning or income is generated you should have to own some property or the legitimate right to own it.

To sum up, the main essence feature is the form of contract or instrument as well as the ways they like to generate their income without any restrictions or without boundaries by relying on normative concepts that behavioral economists expressed and defend.

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