On the Journey to Understand Islamic Financing

I’ve been interested in Islamic Financing for some time. Sometimes its hard to find information on the topic But here’s several things that I’ve learned so far (it’s a start in learning about Islamic views on Economics and Finance) –

Investing in Stocks

  • “To invest in a company is to sign up to joint ownership and collective risk, while ordinary shares pay dividends not interest.”
  • Businesses Listed on the Dow Jones Islamic Markets Indexes
    • Are examined by a Sharia Board
    • Exclude: gambling, alcohol, pork, banks (b/c of daily trading in debt and riba)
    • Sharia scholars are “unlikely to approve of a firm whose clients owe it large amounts of money” – (accounts receivable)  or “one that depends on high returns from interest”
    • Real question – “how much of its capital it has raised by borrowing and how much by selling its performance or potential in the form of share distributions”
      • “The DJIM board of sharia advisers screens out any company whose debt is higher than one third of its market capitalization (a valuation based on the total number of shares issued times the prevailing share price)”.

Source: http://www.sukuk.me/news/articles/73/Sharia-compliant-finance-The-money-that-prays-.html

Some other things I have been researching into:

Seekers Guidance Course on Islamic Finance

http://www.sukuk.me/

Stock Market in Saudi Arabia (Wikipedia)  – Tadawul

Capital Market Authority – Saudi Arabia

Zawya Islamic Finance News

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