Legal and moral questions in contemporary Islamic banking and finance

As a result of the global financial recession, people have started to think about other ways to curb prevailing economic problems and the Islamic financial system has emerged as a possible, or potential solution to an obvious rescuer to the mayhem. However, exploring Islamic banking and finance practically means adopting Islamic norms which include its legal and moral frameworks. Islamic Law is generally based on these two frameworks and departing from them could render the activities conducted under its name religiously unacceptable. The Islamic economic model is based on fairness. Everyone involved in Islamic business is entitled to be fully informed of the substance sold or bought and must not be misled or cheated. While pursuing economic well being is encouraged in Islamic law, engaging in clearly prohibited contents such as alcohol, pork related product, usury, gambling and gharar (ambiguous dealing) are legally and morally forbidden in Islam. Ethics and morals are the core kernels of Islamic law in general and essentially of its commercial transaction. The principles underlying Islamic ethical system revolve around the unity of God which subjects human being to behave morally and to be law abiding; equity (al-‘adlwa al-ihsan) that motivates one to show kindness to others; free will (ikhtiyar) that holds human beings responsible for their acts. The main reason for the prohibition of certain things in Islamic commercial law is based on morality of not compounding financial problems on peoples and not exploiting their destitution and desperation to get out of the problem. Thus, how Islamic standard of moral value can gain acceptance within western conventional system of trading is a topic worth exploring