An overview of Islamic finance: History, instruments, prospects

Abstract

Islamic finance has grown rapidly over the past few decades to become a $2 trillion industry. It is based on the principles of the Sharî‘a (Islamic law), notably the prohibition of ribâ (interest) and the avoidance of activities considered harâm (unlawful), such as gambling or alcohol consumption. This paper explores the rationale behind the industry; its history; its instruments, products, and services; its appeal to both Muslims and non-Muslims; and the controversy that surrounds it.