Islamic Finance: Developing Religion-based Business
Abstract
Islamic finance is one of the religion-based business as an instrument for Muslim to gain wealth, developing properties and maintaining treasures. All those business activities are part of the Muslim obedience to God. Islamic finance is regulated by Islamic law by five law indicators, compulsion, prohibition, voluntary, hated and permitted. All those regulations are elaborated in the Islamic jurisprudence for being the standards of all kinds of businesses. So, the final conclusion of every transaction will be indicated as lawful or unlawful. There are three principles in Islamic finance, equity, participation and ownership. Islamic finance is regulated by a principle of equity, meaning that every party in business is a partner, so, it is banned to render difficulties by one to another through uncertain contract. Then, Islamic finance is also developed under the principle of participation, meaning each party of the contract in business should develop partnership by stickling a business principle of Profit and Loss Sharing (PLS). The last one is ownership, meaning that the object of the contract should be available at the time of contract, so the seller can transfer the goods, while a buyer transfers the price. Those principles are developed in Islamic finance to maintain the wealth of Muslim community.
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