Islamic banking and financial in a global economy Assignment

Islamic banking and financial in a global economy - Assignment Example This growth is conspicuous from the emergence of new Shariah compliant instruments in various asset classes, ranging from equities, real estate, commodities and private equity (not bonds as interest bearing instruments are considered prohibited (haram)). Estimates suggest that since 1990, the market size of the Islamic Finance has multiplied five times from USD 150 billion to USD 900 billion in the year 2008; whereas it is expected to more than double at USD 2 trillion by the year 2010. The main markets currently involved in the Islamic finance and banking across the globe comprises mainly the active participation from the GCC countries, followed by Middle Eastern and North African countries. Slowly and gradually European states, Australia and other American states have started penetrating the market with wild growth rates. It is noticeable from the onset of Shariah compliant banking units of Citigroup (America), HSBC (Britain), and Deutsche Bank (Germany). As opposed to conventional banking, Islamic banking has its roots in the core values of the religion, Islam. Where, Islam itself is the way of life and conduct of living, the underlying theme of the Islamic Financial system is application of ethics and discipline to the banking and finance sector. It is not so simple; it does not only prohibit usury/interest (money on money), but aims at eliminating unjust behavior for the development of an equitable economy. Prohibition of interest, avoidance of uncertainty and contingency, restrictions on short selling, sharing in profits and losses are the core principles governing Islamic finance; it also places restrictions on financing sectors that engage in illegal and illicit activities – such as alcohol and tobacco, gambling, arms and ammunition, pornography and acts that are harmful for the environment. For the avoidance of all these prohibit able acts and indulgences, the community of Islamic shariah scholars have come up with