ISLAMIC FINANCE AND TAKÃFUL IN CONTEMPORARY SOCIAL AND ECONOMIC DEVELOPMENT*

Abstract

This article argues that Islamic finance although with its limitations has relatively been successful in the contemporary social and contemporary development compared to other traditional instruments such as waqf and zakāh. With the changing economic climate and social relations, Islamic finance and takāful is expected to be an important complementary instruments of Islamic social and economic development. To support such a conclusion the article revisits some of the arguments and critics on modern Islamic finance in respect of the above issues and offers justification and explanation as a response to those critics.