The foundation of an Islamic financial system lies in the prohibition of riba, or the charging of interest. Islamic law prohibits any form of unjust enrichment or exploitation through lending. Instead, Islamic finance promotes profit-sharing arrangements that distribute risks and rewards between parties involved in financial transactions.
Asset-Backed FinancingIn Islamic finance, emphasis is placed on real economic activities and the concept of tangible assets. Instead of lending money with interest, an Islamic financial institution can provide financing through partnerships, equity participation, or asset-based transactions. This ensures that investments are backed by tangible assets, reducing speculation and fostering a more stable and sustainable economy.Ethical Investment Principles
