ABSTRACT
Islam is an earthly religion which regulates all aspects of life, and a Muslim should organise their life in harmony with these rules, the Islamic law. Islam also governs the financial activities of Muslims and imposes restrictions on them. This chapter provides an overview of the restrictions imposed by Islam on financial activities, the different interpretations of these restrictions, the Islamic financial products developed as a response to such Islamic restrictions, the discussions of these products, and Muslims’ responses to these discussions. Involvement in a financial activity that is compatible with Islam requires adopting some principles and attitudes, and avoiding certain prohibitions prescribed in Islamic teachings. Islamic scholars’ declaration of conventional insurance as contrary to Islam raised the need for an alternative financial instrument that acts as a substitute for it and is compatible with the religion.
