Wednesday, April 24, 2019

Sai.m Essay Example | Topics and Well Written Essays - 3500 words

Sai.m - Essay Exampleh crises moreover, the fact that the effects of recession on markets that are based on Islamic banking has been limited proves the potentiality of Islamic banking scheme towards its westbound rival. Current study focuses on the examination of the solutions that Islamic banking can cracking regarding the limitation of losses caused because of the credit resound.In order to understand the potential solutions of Islamic banking against the credit crunch it would be necessary to refer primarily to the characteristics and the framework of Islamic banking as an alternative scheme of banking compared to the tralatitious (western) banking system. In accordance with Iqbal et al. (1987, p.29) the central requirement of an Islamic financial system is the replacement of the rate of liaison with the rate of return on real activities as a mechanism for allocating financial resources. On the former(a) hand, Saeed (1996) notes that the investment activities of the Islamic bank would be based on the two legal concepts of Mudaraba and Musharaka, alternatively know as profit and loss sharing (PLS) (Saeed, 1996, p.51) in other words, the existing principles and mechanisms of Islamic banking can be used in order to control the pressure of the global market which is based on the western banking system in this case, an appropriate customization of the rules of Islamic banking system would be required in order to equip to the needs and the potentials of customers worldwide (Scharf, 1983, p.18).On the other hand, Islamic banking system has an important weakness the lack of an appropriate restrictive framework this means that in case of failure the allocation of risk among the persons that participated in a particular proposition investment initiative may not easy furthermore, the recovery of damages would also face difficulties (Ledgerwood, 1999, p.56). The preceding(prenominal) problem is examined in the study of Venardos (2005) in the specific study it is noted that an appropriate regulatory

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