Islamic economy Essay Example | Topics and Well Written Essays - 1000 words

Islamic economy - Essay Example Throughout the Muslim nations, the comprehension was nothing was lawful about banks (Thomas 4). The modern setting of Islamic banking began in the 1960s in Egypt; nevertheless, this attempt was unfruitful and limited to certain contemporary setting. There were two events that triggered and spread the development of Islamic economy. The first event was the OPEC oil crisis as it was referred to in the west; however, unlike in the west, quotas and increased oil prices resulted in increased GDP per capita in the oil-producing Islamic nations. This resulted in increase of gross savings, consumption and most significantly demand for a banking system fit with Islamic regulations for devout Muslims. The second trigger was the Islamic revolution in Iran because it inspired the Iranian government to require a banking system that complies with Islamic sharia’a laws (Thomas 55). Recognition of non-western economic thought remedied the prevailing ignorance in the west regarding contributio n of Arab-Muslim thinkers in economics. Islamic economists criticized the assumptions upon which conventional economics based and their policies. Islam emphasizes communal responsibility and harmony of the Muslim nations or Muslim community. Islamic economists associated utilitarian to hedonism, which they considered as a replacement of the moral values. Unlike Marxist approach to remuneration that considers labor as a source of value; Islamic economists identify the legitimacy of rental income together with profits. With inbuilt deepness and breadth of Islamic commercial law, current jurists find realistic and hypothetical jurisprudence upon which to draw solution when confronted with disputes of the contemporary marketplace. The initial few decades of modern Islamic economy was a period of revival and the last decade has been an era of significant innovation. Modern Muslim jurist provide sharia’a-compliant solutions to the expanding spectrum of needs. Toward the end of the 1980s, the situation began to change with Islamic and banking and economy growing beyond the expectations of Islamic economy supporters. Since then, Islamic finance has become a growth industry with several multinational banks and asset management companies taking interest in the development of Islamic economy (Thomas 5). Within the banking and finance industry significant developments began with the significant reason being the progress made by Muslim jurisprudence to, understanding the modern business of commerce and applying sharia’a principles. An additional reason was the development of facilities by sharia’a boards with normal contracts allowing Islamic economies to be at ease with the novel organization. The renewal of Islamic commercial energy led to the development of cooperation and helpful interactions between Muslims and people with different religious backgrounds. Acceptance of sharia’a in Islamic economies does not lead to rejection of tools necess ary for economic analysis; rather, it implies evaluation of economic policy with moral perspective according to religious teachings (Thomas 8). Apart from oil and gas-rich states, many Muslim economies are either low or middle-income developing nations, where often