Chapter 1: Introduction to islamic social finance and economics

Abstract

Islamic social finance is a framework within Islamic social finance that promotes financial activities aimed at achieving social and humanitarian objectives while adhering to Islamic principles. It combines the principles of Islamic social finance, which are rooted in Shariah law, with a focus on addressing social welfare and community development. Islamic social finance encompasses various financial instruments and mechanisms designed to foster economic justice, alleviate poverty, promote social cohesion, and support sustainable development. Some key components of Islamic social finance include several components. First, zakat is an obligatory form of charitable giving in Islam. It involves the redistribution of wealth from the affluent to people in need. Muslims who meet specific criteria of wealth must give a portion of their wealth (usually 2.5%) to specified categories of recipients, such as the poor, the needy, debtors, and those working to collect and distribute zakat. Second, sadaqah refers to voluntary acts of charity in Islam. It can be given at any time and in any amount and is considered a means of purifying wealth and earning blessings. Sadaqah can be used for various social welfare purposes, such as supporting education, healthcare, disaster relief, and community development projects. Third, waqf is a form of endowment where a person dedicates a specific asset, such as land or property, for a charitable purpose.