Fundamentals of Islamic Finance

Résumé du document

The practice of the Islamic Finance is based on the respect of the Islam and more precisely of the Sharias. Rules: Islam is a complete way of life and provides guidance in the conduct of one's private, social, political, moral and economic affairs. Thus Islamic Finance has to be in harmony with this moral. The Islamic economy encourages the enrichment of the individuals but on the basis of fair distribution. Individual property is authorized and the profit is justifiable.

Extraits

[...] The Islamic Finance has to be in harmony with this moral. The Islamic economy encourages the enrichment of the individuals but on the basis of a fair distribution. The individual property is authorized and the profit is justifiable. However the excess and the wasting are condemned because if money is spent pointlessly, it penalizes the functioning of the economy. But the fluidity and the liquidity of this economy are indispensable, the money always has to circulate in order to contribute to the growth of the wealth of the Moslem communities. [...]

[...] The Islamic finance is growing fast. It is more and more important in the international banking environment and this trend is set to continue. That also interested me to understand this phenomenon. Besides, this new type of bank is not so different than our conventional system. So I have chosen this course in order to be aware of all these facts. In this paper, we will define in a first part this type of banks and the uniqueness of their system. [...]

[...] Then, we can see the Mudaraba contract. In this contract, the bank finances the totality of a project but the management of the affair is in the hands of the customer entrepreneur. When the capital invests by the bank was paid off by the customer, the realized profits are shared between both parts. From these two examples, we can say that the particularity of the Islamic banking system compared with the western system, is to hold a very important role within the framework of the financing of projects of its customers. [...]

[...] As we said it previously, these banks do not practise interests with their customers, contrary to our classic banks. It is thus from this strong constraint that they propose adapted products, which look like in a certain way products proposed by their western competitors but which have original particularities. That is what we will see with some contract examples proposed by Islamic Banks. First, we can analyse the Musharakah contract. It means a partnership between the bank and its customers. [...]

[...] Islamic Banks in France 1 Why Islamic Finance in France is possible? The Islamic finance is still little implanted in Europe. Nevertheless, she could have an interesting development there. Essentially present in Great Britain and more exactly in London, this finance could become established soon in France where the potential market is important. It lives in France the most important Moslem population of all the European Union, what explains the possibility of a strong development of this finance in this country. [...]