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Philosophy and Fundamentals of Sharī’ah for Islamic Finance
SHA0011

TOPIC 5: ISLAMIC ECONOMICS AND FUNDAMENTALS OF
ISLAMIC BANKING AND FINANCE

Learning Objectives

At the end of the topic, you will be able to:
• Describe economics and economic principles of Islām
• Understand Islamic view on economic problems
• Describe the development of Islamic banking and finance globally and locally
• Understand the differences between Islamic and conventional banking
• Understand the perspectives of Sharī’ah in the implementation of Islamic banking

UNIT 1: DEFINITION OF ECONOMICS AND ECONOMIC PRINCIPLES OF
ISLĀM

The Economic Principles of Islām

Islām has laid down certain principles and limits for the economic activity of
a man so that the entire pattern of production, exchange and distribution of
wealth may conform to the Islamic standard of justice and equity.

What is Economics?
The word economics has many definitions, some of these definitions are:

a. Economics is the social science that studies the allocation of scarce
resources to satisfy unlimited wants.

b. The social science concerned with the efficient use of limited or scarce
resources to achieve maximum satisfaction of human materials
wants.
c. Economics is the study of choice and decision-making in a world with
limited resources.

Definition of Islamic Economics
a. Islamic economics is a social science which studies the economic
problems of people imbued with the values of Islām.

b. It is a study of social science which enables people to perform
their obligations to Allāh SWT and to the society.

c. Islamic economic is a study of an individual not only as an isolated individual
but also a social individual having;

i. Faith

ii. Ethics (believing in the six articles, his deeds is accountable to
Allāh SWT as it is guided by Sharī’ah)