Islamic Banking and finance Essay Example | Topics and Well Written Essays - 4500 words

Islamic Banking and finance - Essay Example t, lack of technological support and sophistication for dealing with long drawn projects and existence of information asymmetry in relation to unique products offered by Islamic banks (Abduh and Omah, 2012). The paper is aimed at a detailed discussion of Islamic Banking development and foundations that lay the basis for their banking system. The paper attempts to understand critical aspects of the Islamic banking system and one of its critical schemes of profit and loss sharing mechanism within their lending process. Through an understanding of the PLS structure, the paper comprehends reasons for its unpopularity and reduced acceptance over other modes of finance, despite its evident advantages. The identification of problems also brings forth solution to problems associated with PLS finance. The paper makes recommendations to improve and revive the PLS finance based on such comprehensive analysis. With independence of Muslim community, it has been increasingly felt that modern financial institutions need to come into the Islamic Banking system and run in compliance with the Islamic sensitivity. The first degree of concrete steps towards combining modern day finance with Islam was seen in Egypt through Mit Ghamur project of savings in 1963 (Al-Alwani and El-Ansary, 1998). This project refrained from calling themselves to be Islamic in nature, yet there was an inherent culture of providing financial intermediation, as per teachings of the Islamic community. Dubai Islamic Bank was the first of its kind in commercial modern Islamic Banking and was founded in 1975 (Thomas, 2006). Out of a total of 176 Islamic banks as of 2006 that have been registered with Bankscope, 70% have been reported to be concentrated in Middle East. The remaining is split between South East Asia with 17% and Sub-Saharan Africa with 15% (Al-Hejailan, 2000). The report by Alvi (2010) also states that develop ment of organizational structures towards more sophisticated financial instruments like,

Gross Domestic Product and Living Standards Essay

Gross Domestic Product and Living Standards - Essay Example This paper is being carried out to evaluate and present three equivalent approaches in calculating the GDP: the value-added approach which looks at the production of firms; the income approach which determines where firms spend their revenues; and expenditures approach which assesses where households spent their income (How Do We Measure GDP 1). Though all these approaches come up with the same value for GDP, the most commonly used method is the expenditure approach. In this equation, consumption and investment represent the amount spent on final goods and services. Meanwhile, the export minus imports in the equation which is often referred to as net exports is a method of adjusting the expenditures on goods produced abroad (imports) and adding back in the products and services not consumed domestically (exports).  where private consumption represents most of households expenditures on food, housing, etc.; where government consumption represents the sum of governments spending on f inal goods and services such as salaries of the public servant, purchase of weapons for the military, etc.; where investment is defined as business investment in the economy, and net exports show the difference between gross exports and gross imports (Gross Domestic Product 2-8). GDP is one of the most popular measurements of wealth in a certain country. As discussed above, GDP measures the amount of production in a certain economy on an annual basis. Since the amount of production is an indication of how much input an economy has and how efficient its technology is in converting these input into final goods and services, it is also a potent indicator of the capacity and capability of an economy. A rise in real GDP indicates a rise in the overall production which also signals more efficiency in the economy in the utilization of its resources. Using another approach, the GDP is also an implication of the amount of wealth in the country as it sums up the expenditures of all the player s in the economy. Viewing it in another way, GDP is an indication of how much money each sector has in the economy to be able to purchase final goods and services. In short, GDP is an indicator of a country's purchasing power as GDP represents the sum of purchases all the economy players make in a year. GDP is therefore argued as one of the indicators of an economy's standard of living as an increase in GDP signifies more goods and services being produced and consumed (GDP and Living Standards 1).  GDP can also be used as an indicator of the problems that an economy faces at a certain time. As GDP is composed of the performances of actors in the economy, the equation is used to pinpoint a certain sector which is not performing efficiently. For example, a decrease in GDP is observed in a certain year. The cause of the contraction of the GDP can be traced in the equation by looking at the values recorded by different players.