Shari’ah Regulation and Model For Islamic Finance

Abstract

The aim of the research is to investigate the likelihood of the financial crisis to occur if the Islamic Financial system had been globally adapted. It is includes a brief description of the main causes of the global financial crisis mentioned by experts, which are mainly the subprime and adjustable rate mortgages (ARM) loans. In addition, the paper includes Islam’s position on interest, which is basically prohibiting it. Furthermore, the basic contract and regulation model for Islamic finance used by Islamic Banks, such as, mudarabah and Murabahaetc, are described. Finally, a comparison between the Islamic and conventional  financial systems is included. It was found by this research that the Islamic system would have prevented the crisis.