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Islamic Finance is just a word..

Reader comment on item: Be Careful Investing in Islamic Financial Institutions
in response to reader comment: What is wrong about Islamic finance is the word 'Islamic'

Submitted by Malik Abdul Rasheed (Qatar), Nov 19, 2011 at 23:32

Prashant,

You should read my comment more carefully. I said the following:

"There are many Islamic institutions that have not done an injustice to any of their customers, and as you know there will always be "bad apples". Islamic financed or not."

Which means I accept that either financial approach (interest-based or not) can be victims of corruption. However, my point is that profit-sharing is a more equitable and trustworthy vehicle than an interest based system. Let's not get caught up in labels. I use the term "Islamic Finance" as an identifier so people know what I'm referring to. And profit-sharing is not an "Islamists" practice. it's an investment approach that has been accepted as an appropriate system within the boundaries of what Allah has ordained for Muslims. The idea that this is some "cultish" fringe movement of is Islam is fallacious in nature.

At this present moment, the world economies are struggling under the weight of their interest-based system and their time preference theory of interest doesn't seem to be holding up too well. As many scholars who are way more familiar with the short-comings of Riba than me, have explained that a Riba-based system invites too much speculation and value distortion. Now to account for all this value running away from the fundamentals, we are in this fiat currency disaster. By far one of the clearest and objective explanations of "Islamic Finance" is Brian Kettell's Islamic Finance in a Nutshell: A Guide for Non-Specialists.

Islam related or not, I cannot defend something that is not working. Interest-based system is not working.

Submitting....

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