Legal and Practical Aspects of Islamic Securitisation Essay

Legal and Practical Aspects of Islamic Securitisation - Essay Example The term â€Å"Islamic finance† is a recent invention having only appeared in the middle of the 1980s. Previously, any commercial activities that complied with Islam was referred to as â€Å"interest free† or â€Å"Islamic banking†. The impetus for establishing Islamic financial systems grew out of perceptions on the part of many Muslims that they existed in an essentially hostile â€Å"non-Muslim environment.† Spurred by the increase in rich oil resources during the 1973 – 1974 after a global oil crisis, oil producing Muslim countries were encouraged to implement innovative financial tools that closely resembled those used by Western businesses. In more recent times, Islamic Banking and Finance initiatives have expanded at a rapid rate throughout Muslim countries and in non-Muslim countries with large Muslim populations. As a result, Islamic Banking and Finance is gaining currency in significant Western businesses. This is an interesting and unique development given that Islamic finance is governed by the Shariah and as such is not a universal concept. The fact is the Shariah or Islamic law governs all daily activities of Muslims. From a financial perspective, the Shariah governs not only how capital can be acquired but also how it can be discharged. While wealth may be acquired, it may only be acquired by methods that are fair to all participants.