General Discussion
Related: Editorials & Other Articles, Issue Forums, Alliance Forums, Region ForumsMaybe Shari'a law should come to America
in the form of Islamic banking.
https://en.wikipedia.org/wiki/Islamic_banking_and_finance#Principles
Islamic banking has the same purpose as conventional banking: to make money for the banking institute by lending out capital while adhering to Islamic law. Because Islam forbids simply lending out money at interest, Islamic rules on transactions (known as Fiqh al-Muamalat) have been created to prevent it. The basic principle of Islamic banking is based on risk-sharing which is a component of trade rather than risk-transfer which is seen in conventional banking. Islamic banking introduces concepts such as profit sharing (Mudharabah), safekeeping (Wadiah), joint venture (Musharakah), cost plus (Murabahah), and leasing (Ijar).
Interpretations of Shariah may vary slightly by country. According to Humayon Dar,[50] the Islamic Republic of Iran follows a more liberal interpretation of the Shariah than Malaysia, whose interpretation is more liberal than Turkey or Arab countries. Mohammed Ariff also found less exacting interpretation of Shariah compliance in Iran where the government had decreed "that government borrowing on the basis of a fixed rate of return from the nationalized banking system would not amount to interest and would hence be permissible."
Thoughts?
jonno99
(2,620 posts)in making a determination if it would work well in America...
KamaAina
(78,249 posts)Murabahah may be called an Islamic mortgage transaction, instead of lending the buyer money to purchase the item, a bank might buy the item itself from the seller, and re-sell it to the buyer at a profit, while allowing the buyer to pay the bank in installments. However, the bank's profit cannot be made explicit and therefore there are no additional penalties for late payment. In order to protect itself against default, the bank asks for strict collateral. The goods or land is registered to the name of the buyer from the start of the transaction. Another approach is EIjara wa EIqtina, which is similar to real estate leasing. Islamic banks handle loans for vehicles in a similar way (selling the vehicle at a higher-than-market price to the debtor and then retaining ownership of the vehicle until the loan is paid).
An innovative approach applied by some banks for home loans, called Musharaka al-Mutanaqisa, allows for a floating rate in the form of rental. The bank and borrower form a partnership entity, both providing capital at an agreed percentage to purchase the property. The partnership entity then rents out the property to the borrower and charges rent. The bank and the borrower will then share the proceeds from this rent based on the current equity share of the partnership. At the same time, the borrower in the partnership entity also buys the bank's share of the property at agreed installments until the full equity is transferred to the borrower and the partnership is ended. If default occurs, both the bank and the borrower receive a proportion of the proceeds from the sale of the property based on each party's current equity. This method allows for floating rates according to the current market rate such as the BLR (base lending rate), especially in a dual-banking system like in Malaysia.
There are several other approaches used in business transactions. Islamic banks lend their money to companies by issuing floating rate interest loans. The floating rate of interest is pegged to the company's individual rate of return. Thus, the bank's profit on the loan is equal to a certain percentage of the company's profits. Once the principal amount of the loan is repaid, the profit-sharing arrangement is concluded. This practice is called Musharaka. Further, Mudaraba is venture capital funding of an entrepreneur who provides labor while financing is provided by the bank so that both profit and risk are shared. Such participatory arrangements between capital and labor reflect the Islamic view that the borrower must not bear all the risk/cost of a failure, resulting in a balanced distribution of income and not allowing the lender to monopolize the economy.
Laffy Kat
(16,376 posts)Like the right to LIVE.
KamaAina
(78,249 posts)just the interest-free banking system.
Coventina
(27,089 posts)Church.
KamaAina
(78,249 posts)Coventina
(27,089 posts)Interest-taking became OK as long as it wasn't considered extortion.
It is defined as a legitimate recognition of the present and future value of money.
Personally, I lament the change.
former9thward
(31,963 posts)Which is about the state of economies of most Islamic nations outside of the ruling royals. That interest you despise so much provided the incentive for investment which brought most of the world out of poverty.
Coventina
(27,089 posts)the economy.
B2G
(9,766 posts)and anything else deemed illegal by the state.
I can't believe we're even having this discussion.
KamaAina
(78,249 posts)the haraam piece would presumably go by the wayside.
thereismore
(13,326 posts)leftynyc
(26,060 posts)For every success story you can share about interest free banking - I could post 1000 stories why sharia law is a repressive, regressive, oppressive crap set of laws. Liberals have been fighting for decades get Christianity out of the public domain and you want to put Islam in instead. No thanks. I'll pay the interest.
KamaAina
(78,249 posts)one of the points was to show that Islam has, in fact, produced some positive things.
Cleita
(75,480 posts)you can cherry pick the Ten Commandments. They seem to come as a whole. I see nothing wrong though with using a better system that could be workable in our society from another society. However there are other systems equally workable that we have used in the past but don't use now that we could bring back.
In the Middle Ages usuary in the Christian world was considered a cardinal sin, so there were very strict rules about charging interest. Also, the Knights Templars, who were bankers as well as Crusader warriors, had a nifty system of transferring money across nations and continents that is very similar to one used in the Islamic world and I believe is still used in backward nations without much infrastructure like Afghanistan.
Sure we don't want to go back to the Middle Ages, however, there are some very good economic systems from the past, that have stood the test of time, that we seem to have discarded in favor of the "greed is good" doctrine.
bigwillq
(72,790 posts)LittleBlue
(10,362 posts)I've looked at this for years. They change the wording and payment structure but it functions similarly to secular banks.
Interest is called loan fees or whatever, when it's essentially the same as interest. Not being able to gamble on probabilities would hurt us.
A credit union provides many of the same consumer-friendly aspects as Islamic banking.
Yo_Mama
(8,303 posts)normal banking.
You change the words, but it operates pretty much the same. Instead of "interest" it's a share of returns.
mwrguy
(3,245 posts)Is there much to learn from Christianity?