Abstract
Islamic finance has faced a two-fold criticism from scholars; viz. constructive criticism and destructive criticism. Majority of the scholars criticize it with the intention to improve its overall development, but some scholars are more negative in their criticism. This paper proposes that Islamic banks (a component of Islamic finance) are not charitable institutions, but are the intermediary institutions that take care of investors’ expectations to keep the time value and return to their investments intact with the market fluctuations. The purpose of this paper is to provide better insight about Islamic finance so as to further improve this industry to achieve its long term goals and serve the society better. The paper also attempts to answer some of the common allegations imposed by scholars towards Islamic finance.
Highlights
In the last couple of decades, the progress of Islamic finance in the world has been satisfactory
Islamic finance has faced a two-fold criticism from scholars; viz. constructive criticism and destructive criticism
This paper proposes that Islamic banks are not charitable institutions, but are the intermediary institutions that take care of investors’ expectations to keep the time value and return to their investments intact with the market fluctuations
Summary
In the last couple of decades, the progress of Islamic finance in the world has been satisfactory. A fair stream of research has been conducted to disprove the escalating progress of Islamic banking. Some scholars have put some allegations towards Islamic finance which when observed keenly fail to prove the same. It looks that many scholars fail to understand what Islamic finance is, and they label Islamic banking same as the Islamic finance. Many scholars write against Islamic finance with an intention to improve this system by criticizing it constructively, but some scholars are criticizing it for the sake of criticism and most of their allegations seem to be far from truth. We assume it to be necessary to first understand the basics of Islamic finance so as to answer the most common allegations based on the Islamic finance principles
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