Introduction

Based on Shariah teachings, the Islamic financial system promotes ethical values; hence it is not value-neutral, as is the case of the conventional financial system. The Islamic financial system endeavors to advocate Maqasid-based approach whereby public interest (Maslahah) is promoted, and harm (Mafsadah) is to be prevented. Islamic finance provides financial services compliant with Shariah (Islamic law). It fosters financial markets to channel funds to the real economy by promoting the risk-sharing concept instead of risk transfer. The main reason why Islamic banking outperforms other sectors is that Muslim communities around the world look for alternative institutions that provide their basic financial needs in a Shariah-compliant way. The chapter also presents an overview on the key concepts discussed in this book.