Category Archives: Articles on Islamic Economics

Welfare Function in Islam


Salman Ahmed Shaikh Human welfare in Islam encompasses economic welfare, but comprises much more than that. The achievement of human welfare is sought in both aspects of human life, i.e. worldly life and eternal life hereafter. Hence, the human welfare … Continue reading

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Difference between Islamic Economics and Islamic Law


Salman Ahmed Shaikh Islamic law is derived from Holy Quran and teachings of Prophet Muhamad (pbuh). Analogical deduction of specific juristic applications based on core principles is part of Fiqh. But, to be meritorious as a separate field of inquiry, … Continue reading

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Market Efficiency: Comparing Islamic And Conventional Funds


Salman Ahmed Shaikh The most recent Nobel Laureate in Economics, Eugene Fama in 1965 coined the phrase “efficient markets” and defined market efficiency as follows: “In an efficient market, competition among the many intelligent participants leads to a situation where, … Continue reading

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Labor Productivity And Technical Progress in Islamic Framework


Salman Ahmed Shaikh Most developing countries have lower labor productivity. Some of the reasons why people are not able to increase their productivity include: lack of education and hence lack of employable skills, poor health, malnutrition etc. Islam has made … Continue reading

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Critical Questions on Marxian Economics


Salman Ahmed Shaikh Marx said that labor creates surplus value in production process which the capitalists extract in an exchange. The surplus accumulates and this is exploitation of labor by capitalists. However, we note few critical observations below: First, the … Continue reading

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Is Islam the Cause of Underdevelopment


Salman Ahmed Shaikh It is observed that many of the developing countries are countries with Muslim majority population. In fact, if we flip this, almost every country with Muslim majority population seems to be underdeveloped. Is this a coincidence or … Continue reading

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Scope of Islamic Economics


Salman Ahmed Shaikh For recognition as a distinct field in economic inquiry, any school has to have a distinction in methodology, offer positive explanation of an economic phenomenon or propose policy suggestions on recurrent and important economic issues. For these … Continue reading

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Microfinance using Equity Based Contracts


Salman Ahmed Shaikh In this article, we propose an alternative to microfinance using equity contracts. We propose establishing two separate institutions: 1. Several Micro Venture Capital (VC) funds could be established either privately owned or government owned that could invest … Continue reading

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Critical Analysis of Arguments in Favor of Interest


Salman Ahmed Shaikh In this article, we briefly analyze the logical arguments that are usually presented in the defense of interest as a price of money capital in loans. Interest is the price of risk It is not correct to … Continue reading

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Effect of Zakat on Asset and Capital Markets


Salman Ahmed Shaikh Zakah is a religious obligation to pay a part of wealth and production to the government. In its economic character, Zakah is a combination of a net worth tax and production tax. Zakah would be levied as … Continue reading

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