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What Are Advantage And Disadvantage Of Islamic Economics?

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The main advantage of Islamic economics is the fact that it has no interest rates across its banks. The negative side of Islamic economics is shown through people who argue that the system is irrelevant and impractical. Islamic economics is based around Islamic literature that states that economic order should conform to Islamic scriptures and traditions. It states that according to Sharia's condemnation of interest the economic world should have an interest-free Islamic banking system. This banking system developed in the 1970s and centres around 'behavioral norms' that are derived from the Quran and Sunna. Zakat tax is the basis of Islamic fiscal policy and prohibition of interest.

Shia Islam has increased the advantages of the Islamic banking system by developing Islamic economics that emphasize the uplifting of the masses, ensuring participants in the marketplace are rewarded for being exposed to risk and playing a major role for the state in matters such as circulation and equitable distribution of wealth. The system is said to be 'third way', neither Capitalist nor Socialist and while it has the advantages of both it has none of their drawbacks. The advantages of this system has been noticed by many other banks across the world and many often Muslim mortgages and loans in accordance to the Islamic economics. The Islamic finance sector was worth up to 500 billion dollars in 2006 and its focus remains on promoting social justice.

Many have criticized the Islamic economic system and pointed out its disadvantages. Some have suggested that the system is irrelevant, incoherent, impractical and incomplete. It has been said to just be a mix of socialist ideas that are not efficient in practise. It has been suggested that the underlying rules of the Islamic economy do not actually comply with the strict prohibitions they state that they follow.

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