What Is Islamic Finance System

Islamic finance is a type of financing activities that must comply with sharia islamic law.

What is islamic finance system. Islamic finance refers to the provision of financial services in accordance with shari ah islamic law principles and rules. The common practices of islamic finance and banking. Islamic finance is a financial system that operates according to islamic law which is called sharia and is therefore sharia compliant. Islamic finance refers to how businesses and individuals raise capital in accordance with sharia or islamic law.

The islamic financial system is not much different from the products and services in the traditional financial system but it operations are essentially based on a certain set of moral and ethical principles that determined what is viewed as morally right implying actions and transactions that promote public good and wrong implying actions and transactions likely to be against the public good. However these entities are governed both by islamic law and the finance industry rules and regulations that apply to their conventional counterparts. Islamic banking or islamic finance arabic. مصرفية إسلامية or sharia compliant finance is banking or financing activity that complies with sharia islamic law and its practical application through the development of islamic economics some of the modes of islamic banking finance include mudarabah profit sharing and loss bearing wadiah safekeeping musharaka joint.

It also refers to the types of investments that are permissible under this form of. The concept can also refer to the investments that are permissible under sharia.