Introduction to Islamic Finance (1 of 4): The basics you should know.

Practical Islamic Finance
4 Apr 201911:22

Summary

TLDRIn this talk, Brother Rakan Kadi, a distinguished finance graduate from Ohio State, explores the concept of Islamic Finance. He outlines its foundational principles based on Quranic teachings and the Sunnah, emphasizing the importance of avoiding harmful practices like interest (Riba). Kadi reflects on the slow growth of Islamic Finance, noting that while it’s gaining popularity, it still comprises a tiny share of global financial assets. He argues that the main appeal of Islamic Finance today is its sense of religious compliance rather than superior financial products, encouraging further reflection on authentic Islamic practices in business.

Takeaways

  • 😀 Brother Rakan Kadi, an alumnus of Ohio State University, is passionate about Islamic Finance and aims to educate people on its principles and real-world applications.
  • 😀 Islamic Finance is based on the principles outlined in the Quran and Sunnah, focusing on prohibitions like interest (riba) and promoting mercy in financial dealings.
  • 😀 Islamic Finance has experienced growth, but still only constitutes 1-2% of global financial assets, despite Muslims making up 25% of the global population.
  • 😀 The main value proposition of Islamic Finance today is to help Muslims feel better about their business dealings, rather than offering superior financial products compared to conventional finance.
  • 😀 There is a significant gap in the scholarship and practical application of Islamic Finance, which led Brother Rakan Kadi to contribute to this field with his research and writing.
  • 😀 The underlying philosophy of Islamic Finance revolves around the cost-benefit analysis of financial actions, where the harm of a transaction must be considered greater than its benefits if it's prohibited.
  • 😀 There is an ongoing misconception that if something hasn't been done before in Islam, it's not Islamic. However, Islamic Finance is grounded in Quranic principles and Sunnah, not just historical practices.
  • 😀 Brother Rakan Kadi encourages Muslims to be proud of their faith and integrate it into all aspects of their professional and academic lives, including finance.
  • 😀 The growth in Islamic Finance is often exaggerated, and many of its current products are not competitive compared to conventional alternatives.
  • 😀 Reba (interest) is identified as the most significant corruptor in Islamic finance, as it goes against the core principles of fairness and mutual benefit outlined in the Quran.
  • 😀 Islamic Finance has the potential to provide true ethical alternatives to conventional finance if its products align better with the guidelines of the Quran and Sunnah.

Q & A

  • What is the primary focus of the talk by Brother Rakan Kadi?

    -The primary focus is to educate the audience about Islamic Finance, its current state, the main corruptors in Islamic business dealings, and how to distinguish authentic Islamic Finance from products that simply market themselves as Islamic.

  • What is Brother Rakan Kadi's background in Islamic Finance?

    -Brother Rakan Kadi graduated with distinction in finance from Ohio State University, conducted research on the viability of Islamic Finance as a substitute for interest-based banking, and later published more than 100 articles on the topic. He also started the first consumer Halal financing investment fund, BFF Income Share Funding.

  • Why is Islamic Finance important according to Brother Rakan Kadi?

    -Islamic Finance is important because it is based on the prohibitions and commandments of the Quran and Sunnah, and it provides Muslims with financial solutions that align with their religious beliefs and values.

  • What does Brother Rakan Kadi mean by saying that Islamic Finance 'kind of sucks'?

    -Brother Rakan Kadi argues that many Islamic Finance products currently fail to offer competitive advantages compared to conventional financing products. He suggests that Islamic Finance often fails to meet the needs of consumers, despite the growth in market share.

  • What are the current market statistics for Islamic Finance?

    -As of 2016, Islamic Finance assets were valued at around $2.2 trillion, with a forecast to reach $3.8 trillion by 2022. However, Islamic Finance accounts for only 1-2% of global financial assets, despite Muslims representing about 25% of the world's population.

  • What is the main value proposition of Islamic Finance today?

    -The main value proposition of Islamic Finance today is that it provides Muslims with a sense of following their religious principles in their financial dealings, even though the products may not be superior to conventional ones.

  • How does Brother Rakan Kadi view the current scholarship in Islamic Finance?

    -Brother Rakan Kadi believes that the scholarship in Islamic Finance is lacking, and he saw an opportunity to contribute to the field by addressing its shortcomings and helping make Islamic Finance more practical and beneficial.

  • What is the underlying philosophy behind Islamic Finance?

    -The underlying philosophy of Islamic Finance is that every prohibition in Islam, including those related to finance, exists because the harm outweighs the benefits. This cost-benefit analysis should guide financial decisions in line with Islamic principles.

  • What are the three major corruptors of Islamic Finance business dealings?

    -The three major corruptors in Islamic Finance business dealings are Reba (interest), Gharar (excessive uncertainty), and Maysir (gambling). These elements are explicitly prohibited in the Quran and undermine the integrity of Islamic financial dealings.

  • Why does Brother Rakan Kadi emphasize the need to distinguish between what is Islamic and what is not?

    -Brother Rakan Kadi stresses the importance of distinguishing between authentic Islamic Finance and products that falsely claim to be Islamic. He believes that if a financial product does not align with the teachings of the Quran and Sunnah, it should not be marketed as Islamic, as it may mislead consumers and fail to impart mercy.

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Etiquetas Relacionadas
Islamic FinanceQuranic PrinciplesMuslim AudienceFinancial EthicsReba ProhibitionIslamic BusinessFinance ChallengesMercy in FinanceFinancial IntegrityOhio StateIslamic Investment
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