Abstract
In Islamic finance - financial institutions, products and services designed to comply with the central tenets of Sharia (Islamic law) - is one of the most rapidly growing segments in global financial services. Islamic finance starts from one basic concept that is to avoid trading directly present for future money. Finance is provided in the form of money in return for either equity or rights to share proportionately in future business profits. It is also provided in the form of goods and services delivered in return for commitment to repay their value at a future date. This is an obvious option in addition to the conventional practices of interest-based finance through which people borrow money and pay it back in the future in addition to interest. This paper addresses itself to four questions: (1) Why all the fuss about the rate of interest? (2) Is Islamic finance, as an alternative to interest based debt finance viable and effective? (3) What Islamic finance implies for the whole economy? (4) Given that Islamic finance is really viable, why it has not been adopted at a larger scale?
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