Market Insight by Felice Giuggioli - Why Islamic Finance?

Islamic Finance is defined as a banking or financing activity which complies with the Shariah law, its interpretation, and practical application through the development of Islamic economics.

The Shariah-compliant investor engages exclusively in the quest for “acceptable” profit. The reason why Islam governs every aspect of a Muslim's life, even those aspects that a non-Muslim would deem to be outside the domain of religion, lies in the very word “Islam”, which literally means submission, submission to the will of Allah. The profit is acceptable only when its generation respects the precepts of the Shariah Law which are based on the intended out-comes of furthering the protection and preservation of religion (faith), life, intellect, progeny, and property (wealth). 

This is the background which sheds a light on the concept of Islamic Finance, an approach informed by the principal prohibitions in Islam which rests on four pillars: Riba (prohibition of interest), Gharar (ban on excessive uncertainty), Maysir (prohibition of gambling), and Haram (ban on investing in forbidden activities like gambling and goods like alcohol and pork, etc.).