Course Description:

The focus of the course is the theory of Islamic Finance. This allows the student to understand the difference between theory and practice. This distinction in practice is a derivative of distinction in principles. The circulation of wealth as well as dissimilarities between standard lending paradigms of traditional banking systems versus Islamic banking where risk sharing and commoditization provide more equitable balance for both customers and financiers is explained.

Students will study the Capitalist finance system and compare it to the Islamic Financial System. Why paying and charging interest, financing harmful or prohibited products or projects, and excessive speculation (Maysir), avoidable uncertainty (Gharar), exploitation (Ghubn) and deception (Ghish) will be thoroughly discussed.

Course Code: MAEF630

Credit hours: 3

Pre-Requisites: None

Learning Objectives:

  • Students will see where the material of this course fits in the overall picture of Islamic Finance.
  • Students will be able to learn about the main defects that make any business deal Islamically unacceptable.
  • Students will be able to identify Ghubn, Gharar, Ghish and Maysir.
  • Students will be able to identify the relationship between theory and practice in Islamic Finance.
  • Students will be able to state the difference between Capitalist and Islamic system regarding financing.
  • Students will be able to explain how different Islamic modes of finance are free of all defects mentioned (Riba, Ghubn, Gharar, Ghish and Maysir).

Course Outlines:

  • Islamic Finance historical development.
  • Principles of commercial laws; circulation of wealth, commoditization, and risk-sharing.
  • Defects to avoid: Riba, Gharar, Ghubn, Ghish and Maysir.
  • Introduction to different modes of finance.
  • Prohibited Conditions in contracts.
  • Relationship between economics and finance.