Islamic Capitalism and Finance

Islamic Capitalism and Finance

Origins, Evolution and the Future

Studies in Islamic Finance, Accounting and Governance series

Murat Çizakça

This illuminating and thought-provoking book questions whether classical Islamic capitalism, which has served Muslims so well for centuries, can provide a viable alternative world economic system. In the current recession – the worst since 1929 – this is surely a provocative question. But if Islamic capitalism is to emerge as a viable alternative, its nature and systems must be well understood.

Chapter 11: Takaful (Islamic Insurance)

Murat Çizakça

Subjects: asian studies, asian economics, economics and finance, asian economics, financial economics and regulation, history of economic thought, islamic economics and finance, money and banking

Extract

Insurance, particularly life insurance, is a highly controversial subject in Islamic economics. In this chapter we will analyse this debate and briefly explain how contemporary Muslims have come up with solutions. But first, we need to provide a historical background of this important institution. Historical background The concept of insurance has a long history in the Islamic world and it is known as takaful. This word is derived from the Arabic word kafala, which means to guarantee. The origins of this institution can be traced back to the pre-Islamic customs of the Arab world where tribal wars were very common and tended to perpetuate. When a member of a tribe was murdered by a member of another, revenge had to be taken and hatred and revenge continued generation after generation. This is because when a tribe lost a member it could retaliate by killing any member of the other tribe. Thus, murder committed by one put the entire tribe into danger. The concept of kafala solved this problem and was therefore absolutely important for the survival of the social fabric. When a member of a tribe committed a murder, this led to one of two consequences. Either a tribal war would break out to avenge the death of the tribal member or a settlement would be reached by paying blood money known as diyah. This blood money that was used to compensate the loss of life came from the tribal fund. The fund was collected from among the members. Each...

You are not authenticated to view the full text of this chapter or article.

Elgaronline requires a subscription or purchase to access the full text of books or journals. Please login through your library system or with your personal username and password on the homepage.

Non-subscribers can freely search the site, view abstracts/ extracts and download selected front matter and introductory chapters for personal use.

Your library may not have purchased all subject areas. If you are authenticated and think you should have access to this title, please contact your librarian.

Further information