Chapter 3

Introducing the Islamic Capital Market

In This Chapter

arrow Examining the core ideas of the Islamic finance industry

arrow Following specific investment criteria

arrow Getting to know industry products and institutions

When the global financial crises started doing serious damage in 2007, nearly everyone felt the pinch. Interestingly, the Islamic finance industry survived these crises with less stress and better performance than many nations’ conventional industries. In addition, assets sold in the Islamic market must comply with Islamic religious principles that result in certain industries and certain conventional trading practices being prohibited. As a result, many non-Muslims now invest in Islamic financial markets.

This chapter explains what Islamic finance is, examines how it differs from its conventional counterpart, and explains its fundamental principles.

Defining the Concepts and Principles of Islamic Finance

Islamic finance is a financial system that operates according to Islamic law (which is called sharia) and is, therefore, sharia-compliant. Just like conventional financial systems, Islamic finance features banks, capital markets, fund managers, investment firms, and insurance ...

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