Category: Business Matters
Fatwa#: 39453
Asked Country: Netherlands Antilles

Answered Date: Nov 09,2017

Title: Difference between Islamic Finance and Islamic Economics

Question

Dear Imam,

I am a non-muslim studying economics. I have come across these terms many times. Islamic Finance and Islamic Economics. Are they similar or is there any difference between them? What is the need for such in todays time? My muslim friend referred me to you for guidance.

Thanking you in advance.

Answer

In the Name of Allah, the Most Gracious, the Most Merciful.

As-salāmu ‘alaykum wa-rahmatullāhi wa-barakātuh.

Islamic Economics is general and refers to the moral aspects of dealings as well as principle aspects of dealings.

Islamic Finance refers to only the financing aspect of Economics.

The basis of Islamic Economics is Divine order of Allah. Allah is perfect and so too is Islamic Economics as it is by Divine order. The perfection of Islamic Economics can be gauged by a comparison with the Capitalist and Socialists system through the four fundamental principles of economics.

D.A.D.D

D-Determination of priorities.

A-Allocation of resources.

D-Distribution.

D-Development.

 

The Capitalist and Socialist system falls short on each one of the four cardinal principles of economics.

 

In Capitalism, whilst there is recognition of ownership of wealth, that is without restriction. As such, all forms of immoralities creep in a capitalist the economy like gambling, interest, casinos etc.

 

In Socialism, there is no recognition of individual ownership. The state owns everything.

 

The world has witnessed the failure of Socialism and recession in Capitalism. The world is witnessing the success of Islamic Finance which is just one aspect of Islamic Economics.

Apart from Islamic Finance having the potential to rescue our economic gloom, it is also a great act of worship.

You may empower your knowledge on Islamic Economics and Finance by listening to the discourses of My Beloved Teacher Hazrat Mufti Ebrahim Desai Saheb Hafidhahullah Islamic Finance from Bukhari Shareef:

http://daruliftaa.net/index.php/resources/downloads/viewcategory/87-discourses-on-kitabul-buyoo

You may also refer to the following book by Hazrat Mufti Taqi Uthmani Saheb Hafidhahullah for further details:

http://daruliftaa.net/~dar60/index.php/resources/publications/finish/27 publications/279-an-introduction-to-islamic-finance-mufti-taqi-usmani

And Allah Ta’āla Knows Best

Huzaifah Deedat

Student Darul Iftaa
Lusaka, Zambia 

Checked and Approved by,
Mufti Ebrahim Desai.

_________________

http://www.muftitaqiusmani.com/index.php?option=com_content&view=article&id=41:present-financial-crisis-causes-and-remedies-from-islamic-perspective- 

 

DISCLAIMER - AskImam.org questions
AskImam.org answers issues pertaining to Shar'ah. Thereafter, these questions and answers are placed for public view on www.askimam.org for educational purposes. However, many of these answers are unique to a particular scenario and cannot be taken as a basis to establish a ruling in another situation or another environment. Askimam.org bears no responsibility with regards to these questions being used out of their intended context.
  • The Shar's ruling herein given is based specifically on the question posed and should be read in conjunction with the question.
  • AskImam.org bears no responsibility to any party who may or may not act on this answer and is being hereby exempted from loss or damage howsoever caused.
  • This answer may not be used as evidence in any Court of Law without prior written consent of AskImam.org.
  • Any or all links provided in our emails, answers and articles are restricted to the specific material being cited. Such referencing should not be taken as an endorsement of other contents of that website.