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.
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-Determination of priorities.
A-Allocation of resources.
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:
You may also refer to the following book by Hazrat Mufti Taqi Uthmani Saheb Hafidhahullah for further details:
And Allah Ta’āla Knows Best
Student Darul Iftaa
Checked and Approved by,
Mufti Ebrahim Desai.