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Saturday, April 20, 2024

Financial Benefits of Adhering to Islamic Principles

To dissipate the notion that the sole reason for the existence of the Islamic finance industry is to gratify the religious obligations of the Muslims of the world, it is always essential that you understand what it entails in the first place. After all, there’s no essence in downplaying something you barely understand and know.

You might not have the foggiest idea about this, but Bahrain is home to the region’s largest concentration of Islamic finance institutions. The vast majority of these institutions venture in almost every arear of Islamic finance and Islamic products.

That said, here are remarkable ways in which adhering to Islamic principles has the potential to offer strong financial advantages for the betterment of both Muslims ad non-Muslims alike.

Helps Lower Economic Inequality

A significant number of commercial financial markets are merely designed to help make the rich, richer. Things tend to be different with Islamic markets since they focus on promoting wealth and risk sharing. That’s not to mean Islam prohibits wealth accumulations. Instead, it creates awareness and responsibility for the poor.

Most Islamic financial products excel most at promoting altruism, economic activity, and social responsibility. If for instance you need money to manufacture a product, then you get to share the risk and profits with money suppliers.

Links Savings and Investments

When you choose to place your paycheck in bank’s savings accounts, the bank most likely promises to keep it safe and pay you interest. This is not really the case with an Islamic savings account since it’s an investment vehicle. With an Islamic bank, you shouldn’t expect a return on savings.

Due to this, you can easily tell when you sign the contract with the Islamic bank that it has plans to actively invest your money to earn profit that it’ll share with you. If you decide to save money in the Islamic finance system, there is no essence of isolating it from economic activity as a conventional savings accounts does.

You don’t get a guaranteed return in an Islamic account, but provided your bank does its job perfectly, you’ll benefit from profits derived from transactions supporting economic transactions in the real world.

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