Prosperity and Social Justice Consequences of Applying Ethical Norms of Islamic Finance: Literature Review

Abstract

The paper aims at elaborating the prosperity and social justice of applying the principle of Islamic finance.  It also analyzes the implication of social justice in stimulating the positive effects in developing economics of all majority and preventing another half of the economics’ faces such as financial crisis, poverty, inequalities, unemployment and wealth distinction between the rich and the poor which occurred in the amid of the global turn oil economic and finance. The paper consists of four sections. First section gives an introduction on Islamic finance, its principles, philosophy and ethical norms; second section explores Islamic finance and the spirit of social justice. The condemnation of interest, gharar, maysir,  and speculation has a profound impacts on low probability of danger of insolvency may occur under applying profit and loss sharing (PLS), increase of participation in the official financial system. The detailed implications of practicing profit and loss sharing in Islamic finance business are need-fulfillment, optimum growth of economy, full employment, equitable distribution, and economic stability.

Key words: Islamic finance, profit and loss-sharing, economic, growth, social justice.