THE ORIGIN OF CONTEMPORARY ISLAMIC FINANCIAL REGULATIONS IN ISLAMIC LAW: A SUBSTITUTE TO TRADITIONAL FINANCE

Abstract

This paper attempts to discuss the theoretical aspects of the Islamic
Finance System and to remove the misunderstood concepts that the
Islamic financial system involves merely the absence of interest and only
applies to those who practice the Islamic faith and is unable to provide a
complete financial system in comparison with the traditional financial
system. The key focus of the paper is to investigate whether the
framework of Islamic Finance is capable to develop a financial system that
would not guide the world in the direction of financial and economic crises,
which the world is experiencing presently. Whereas the proponents of
Islamic Finance consider it as a start of new business avenues and a
substitute to traditional financial system and economic growth. The paper
explains the Islamic banking system in reference with its implementation,
which takes its origin in early 1980’s in the Middle East, Saudi Arabia,
Malaysia, Iran and Pakistan