Date of publication: 2017-08-24 11:38
The prohibition of a risk free return and permission of trading makes the financial activities in an Islamic set-up real asset-backed with ability to cause 'value addition'. Islamic banking system is based oh risksharing, owning and handling of physical goods, involvement in. the process of trading, leasing and construction contracts using various Islamic modes of finance. As such, Islamic banks deal with asset management for the purpose of income generation. They will have to prudently handle the unique risks involved in management of assets by adherence to best practices of corporate governance. Once the banks have stable stream of Halal income, depositors will also receive stable and Halal income.
A loan provides the lender with a fixed return irrespective of the outcome of the borrower's venture. It is much fairer to share the profits and losses. Fairness in this context has two dimensions: the supplier of capital possesses a right to reward, but this reward should be commensurate with the risk and effort involved and thus be governed by the return on the individual project for which funds are supplied. Hence, what is forbidden in Islamic precepts is a predetermined return. The sharing of profit is legitimate and that practice has provided the foundation for Islamic banking.
Another feature condemned by Islamic banking is economic transactions involving elements of speculation, gharar. Buying goods or shares at low price and selling them for higher price in the future is considered to be illicit. Similarly an immediate sale in order to avoid a loss in the future is condemned. The reason is that speculators generate their private gains at the expense of society at large. Under this prohibition any transaction entered into should be free from uncertainty, risk and speculation. Contracting parties should have perfect knowledge of the counter values intended to be exchanged as a result of their transactions. Also, parties cannot predetermine a guaranteed profit.
If you are required to write an Islamic Finance thesis then, you should go after a topic about which loads of information is available to you. You can defend your Islamic finance thesis only if you have got thorough knowledge about your chosen topic. Here is one suggestive topic for you regarding Islamic Finance:
Money is only a medium of exchange, a way of defining the value of a thing it has no value in itself, and therefore should not be allowed to give rise to more money, via fixed interest payments, simply by being put in a bank or lent to someone else. The human effort, initiative, and risk involved in a productive venture are more important than the money used to finance it. Muslim jurists consider money as potential capital rather than capital, meaning that money becomes capital only when it is invested in business. Accordingly, money advanced to a business as a loan is regarded as a debt of the business and not capital and, as such, it is not entitled to any return (. interest).
To start with the draft, the author of the thesis should first narrow down the topic. Since Islamic banking and finance is a very vast topic and many different sub categories come under its consideration, the writer should first decide which topic would be easy for him or her to handle and whether it is possible to find handful information on it or to provide research. Once the narrowing down of the topic is done, at the first step a hypothesis should be developed. Thesis hypothesis testing is very important as it helps to work more efficiently. For example, if a person chooses to write a thesis on &ldquo Riba in Islamic banking and finance&rdquo , the hypothesis should state the way riba helps in dividing among classes of a society.
6. Prohibition of interest-based (riba) transactions
7. Ban on speculation and excessive risk taking (gharar)
8. Islamic tax system (zakat)
9. Discouragement of the production of goods and services which contradict the value pattern of Islam (haram)
Purpose of Thesis Writing on Islamic Banking and Finance. A thesis is a document that researchers submit to a panel regarding their findings about a topic.
The collapse of major Wall Street institutions, notably Lehman Brothers, and the subsequent global financial crisis and economic recession, Islamic banking is seriously being considered and has emerged as a possible alternative to the conventional banking because of the following reasons:
Once the hypothesis is set, Thesis Writing Service suggests the writer to conduct surveys, talk to the experienced people about the topic, and find as much primary and secondary information about the topic as he or she can. Then after doing that, examining the results is another challenge. Many times the trends which you predict didn&rsquo t come out to be the reality, so in that case a person should come up with logical, believable explanations about the discrepancy faced in the research.
&bull It is based on Ethical and Socially Responsible Investments (SRI) &bull It aims at Equity and Justice and leads to poverty alleviation
Optimum Allocation of Resources : Another important objective of Islamic banking is the optimum allocation of scarce resources. The foundation of the Islamic banking system is that it promotes the investment of financial resources into those projects that are considered to be the most profitable and beneficial to the economy.