What is wrong about Islamic finance is the word 'Islamic'

Submitted by Prashant (United States), Nov 17, 2011 at 22:56

Dear Dr Pipes:

I mean no offence here. Let me explain what I mean when I say that the word 'Islamic" is what is wrong in Islamic Finance. When it comes to managing money there are good ways and then there are ways that are not so good. There are many ways in which the entity that has money can make it available to the entity that needs money. Paying interest is one such method and it is like offering your money at a fixed price and with limited risk to you. Profit sharing is another method in which neither the price nor the risk is fixed. Both these methods can completely noble and completely evil. Profit sharing --though looks great to Islamists-- can be very bad if it leads to speculation and gambling (as is happening in Wall Street). Similarly, charging exhorbitant rates of interest --as many credit card companies and tribal lenders do-- can also be bad.

Your reader Malik Abdul Rasheed says that profit sharing is good but charging interest is evil. Which translates to saying that stocks are good and bonds are evil. The argument does not hold much water because, in essence, it says that stocks are good because they are islamic and bonds are bad because they are uninslamic. That is a circular reasoning and that is why the word Islamic is what is bad in 'Islamic Finance'. Malik Abdul Rasheed should try to understand what is going on and not make his decisions based on just islamic/unislamic label.

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