Islamic economic theory and finance

Can you tell me briefly what is Islam’s view of economic theory and finance?

Money, in Islam, is a means and not a commodity. So, there is no price for money. And because gold and silver (or checks fully backed by them) are the only valid money, there is no price for time. Exchanging gold and silver must be “same metal, same weight, same time, hand-to-hand.”

Islamic finance has two primary vehicles: partnerships (Mushaaraka), or interest-free loans (Qardh Hasan). Under the banner of partnership are many financing techniques, such as leases (Ijaara), equity participation (Sharikaat), venture capital (Mudhaaraba), profit sharing (Muraabaha), stocks, etc. With partnerships, a financier puts up the money and the investor or business person puts up the work (aka sweat equity). They share equally in the profits and in the loss. This way a financier will never part with his or her money financing a bad business idea or unpromising project. Non-Islamic lenders do that with ease because they can repossess the investment, or sell the loan in the secondary market, or be bailed out by the government!

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