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  1. Islamisation of Knowledge: Problems, Principles and Prospective click
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  5. Man between Two Laws: A Qur’anic Perspective in Understanding Self and Understanding the Other click


Economics and Business
Teaching of Economics at IIUM: The Challenges of Integration and Islamization PDF Print E-mail

Mohamed Aslam Haneef
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1. Introduction

The teaching of Islamic economics, in both theory and practice, has not been a widely discussed and debated area among Islamic economists. Islamic reforms in education have taken place in many parts of the world since the 1977 First International Conference on Muslim Education in Makkah. While the ‘theory’ and practice of Islamic economics (mainly banking and finance) has become a relatively wide-spread feature in many Muslim countries since the 1980s, discussions and debates on Islamic economics education have been rather scarce.  In fact, issues relating to curriculum and teaching of Islamic economics is at most, an internal matter, rarely discussed at international Islamic economics conferences and meetings. In this chapter, we discuss the practice of teaching modern economics, within the agenda of integration and Islamization of knowledge, including some observations on the current practice and relevant issues that need to be addressed.

One of the earliest attempts at the ‘practice’ of teaching Islamic economics began formally in 1983 with the setting up of the International Islamic University Malaysia (IIUM). The Kulliyyah (Faculty) of Economics (later, Economics and Management Sciences) has been offering degrees in economics (later, in business administration, accounting and Islamic Finance) at both the undergraduate and graduate/post-graduate levels for the last 30 years. This chapter discusses some issues relating to the agenda of ‘Islamization and Integration’ of knowledge as applied to the discipline of economics and looks specifically at the B.Economics program offered at the IIUM since 1983. The analysis uses the framework developed by Haneef and Amin (1997 and 2005)[1]. It then presents some ‘overall comparative facts’ regarding the extent of Islamization and Integration between 2001 and 2010. A couple of major issues are discussed in this chapter, but many others are taken up in the concluding chapter of the book (Chapter 15).

Islamization of Human Knowledge PDF Print E-mail

Mohd Kamal Hassan
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1.    The Importance and Role of Human Knowledge in the Worldview of Islam

It is clear from a comprehensive study of the Qur’an that it emphasizes the special position of human beings as Allah’s most honored creation who are destined to construct a holistic civilization, by managing and developing the world’s resources based on the guidance and knowledge from Divine revelation (al-wahy al-Ilahi) as well as the exertions of the human intellect (al-‘aql al-insani) and will. While reaffirming the supremacy of Divine revelation, the Qur’an teaches that the sound human intellect has been entrusted by Divine revelation to play crucial roles in the confirmation of revealed truths and the development of all fields of human knowledge necessary for effective and wholesome human vicegerency on earth. Thus, there should not be any conflict between Divine revelation and sound human reason.

The Islamic postulate that human beings have to seek and pursue knowledge within the epistemology and ethic of Tawhid (affirmation of the uncompromising oneness of Allah) and servitude (‘ubudiyyah) to Allah (S.W.T.) can be traced back to the very beginning of the descent of Divine revelation to Prophet Muhammad (S.A.A.S) – “Iqra’ bi-ismi Rabbika alladhi khalaq….” (Q.96:1-5).  Knowledge, being a very special gift and trust bestowed by the Creator, Master, Ruler and Sovereign of mankind to the best of His creatures,  would only serve its true purpose – to serve the will of the Sovereign Master – if it is imbued with the servant’s deep and abiding faith in the Master; consciousness of dependency upon the Master’s munificence and absolute power; awe and fear of incurring the displeasure of the Compassionate Master lest the servant becomes ungrateful, forgetful, negligent of his/her duties or misuse the knowledge obtained, or falls sway to the influence of base desires, fleeting pleasures  of worldly life, false gods or temptations arising out of Satanic insinuations, while fulfilling his/her responsibility in the life of this world.

Fiscal policy in an Islamic economy and the role of zakat PDF Print E-mail

Mohammed B. Yusoff

This study incorporates zakat into a simple macroeconomic model of an Islamic economy and analyzes the role of zakat in the national income determination. The reduced form aggregate consumption function suggests that the determinants of consumption are: Zakat expenditure, taxes, income and asset holdings of individuals. Zakat could be used as a counter-cyclical policy through discretionary and non-discretionary fiscal policy. Discretionary fiscal policy is carried out by varying the disbursement of zakat to the recipients. During the expansion phase of the business cycle, the government reduces zakat expenditure to close the inflationary gap. This action helps increase the zakat surplus, in the Baitul-Mal. Likewise zakat expenditure could be increased by using the zakat surplus accumulated during the boom periods, when the economy is in the down-swing to spur aggregate spending and economic activities. Therefore, zakat could complement taxation and government spending as tools of stablization policy.  Full text in PDF

Making development assistance sustainable through Islamic microfinance PDF Print E-mail

Rodney Wilson

Microfinance schemes have been operational since the 1960s, however, they mostly involve conventional finance, whereas many low income Muslims would prefer to have shariah compliant finance. The aim of this paper is to explore how microfinance can be provided on a shariah compliant basis and what instruments and structures could be used. The implication of this paper is that shariah compliant microfinance is best provided by non-banking institutions, which in the case of the wakalah model, may have links to the waqf and zakah authorities.With mudharabah profit sharing microfinance, there is scope for commercial undertakings, but arguably specialized finance companies rather than banks, even Islamic banks, may be more appropriate institutions to get involved.  Full text in PDF

Conceptualisation of the second best solution in overcoming the social failure of Islamic banking and finance: Examining the overpowering of homoislamicus by homoeconomicus PDF Print E-mail

Mehmet Asutay

The phenomenal growth of the Islamic banking and finance (IBF) industry has been remarkable since it came into existence just over thirty years ago. However, a closer reading of this positive development indicates that the IBF industry does not necessarily share the aspirations of Islamic economics, which aims at creating a world order in which the moral economy of Islam with its authentic value system can exist. In other words, the Islamic economic system aspires for the development of Islamic economics and financial institutions founded upon homoislamicus, agents concerned about social justice and human-centred economic growth and development. This indeed indicates the divergence between the aspiration of Islamic economics and the world of IBF. After highlighting and analysing the tension areas between the two and the reasons and sources of this apparent divergence, this paper argues that IBF needs to move into its third stage of development through the institutionalisation of social banking as a second best solution in overcoming the social failure of IBF and in creating value-added for capacity building and social justice.  Full text in PDF

A critical appraisal on the challenges of realizing maqasid al-shariaah in Islamic banking and finance PDF Print E-mail

Asyraf Wajdi Dusuki and Abdulazeem Abozaid

Islam harbours an economic vision that holds the key to a social order capable of providing social justice along with economic prosperity. This vision is deeply inscribed in the objectives of shariah, also known as maqasid al-shariah. Consequently the doctrine of Islamic economics entered debates over the social-welfare role of Islam. It has somehow pursued the goal of restructuring economies according to perceived Islamic teachings and principles. Its most visible practical achievement is the establishment of Islamic banks meant to avoid interest and promote Islamic norms of economic behaviour and ultimately realizing the noble objectives of shariah. This paper examines the challenges of the proper realization of maqasid al-shariah in Islamic banking and finance. These challenges cover various issues: the proper understanding of maqasid al-shariah in Islamic economics; the methods of implementing maqasid al-shariah in Islamic banking and finance; the potential conflicts between macro maqasid and micro maqasid; and the possible abuse of maqasid al-shariah to justify certain financial contracts which in fact contradict the shariah texts. The paper analyses these challenges and provides examples from the current practices of Islamic banks and financial institutions.  Full text in PDF

Islamic banking and finance: Between ideals and realities PDF Print E-mail

Abdul Rahim Abdul Rahman

Islamic banking and finance as an industry is growing at an unprecedented rate. Currently, there are about 270 Islamic banks worldwide with a market capitalization in excess of US$13 billion. The assets of Islamic banks worldwide are estimated at more than US$265 billion and financial investments are above US$400 billion. Islamic bank deposits are estimated at over US$202 billion worldwide with an average growth of between 10 and 20 per cent. Furthermore, Islamic bonds are currently estimated at around US$30 billion. In addition, Islamic equity funds are estimated at more than US$3.3 billion worldwide with a growth of more than 25 per cent over seven years and the global Takaful premium is estimated at around US$2 billion.

Islamic finance is founded mainly on the prohibition of riba’. Thus, the main aim of Islamic banking and finance is to provide an Islamic alternative to the conventional system that is based on riba. As an alternative to riba, the profit and loss sharing arrangements are held as an ideal mode of financing in Islamic finance. It is expected that this profit and loss sharing will significantly remove the inequitable distribution of income and wealth and may lead to a more efficient and optimal allocation of resources as compared to the interest-based system.  Thus, it will ensure justice between the parties involved as the return to the bank on finance is dependent on the operational results of the entrepreneur (Siddiqi, 2001).  Full text in PDF

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