Development of Islamic Financial Systems
Research report published as Chapter 5 of the Asia Institute "Middle East Review Volume 1". Analyzes the development process of financial systems compliant with Islamic law (Shariah) and their positioning in modern financial systems.
Principles of Shariah-Compliant Finance
Principle of Interest Prohibition: Development of financial products based on the Islamic prohibition of interest (riba). Provides detailed description of modern applications of traditional financial methods such as Musharaka (joint venture) and Mudaraba (trust investment).
Risk-Sharing System: Characteristics of financial systems based on sharing of risks and profits, different from conventional debt-credit relationships. Analyzes the principles of prohibiting speculative transactions and emphasizing fund supply to the real economy.
Development in International Financial Markets
Expansion of Islamic financial markets centered on Malaysia and Gulf countries, and establishment of positions as international financial centers. Discusses the growth of the sukuk (Islamic bond) market and entry trends of institutional investors.
Institutional Challenges and Prospects
Differences in Shariah audit systems among countries and efforts toward standardization. Examines competitive relationships and possibilities for cooperation with conventional financial institutions.