Sample Term Paper
The new product development in Islamic financial settings has many implications, and the meanings, relative terminologies and the procedures of Islamic financing varies from that of the conventional one. The importance of the role of financial institutions cannot be denied in any conditions and in any economic system.
But as we move to understand the Islamic financial system these concepts than seek more implied and clearly expressed procedures and significance. By glancing at the modern banking system and the Muslim countries the fact comes to light that, there is an inbuilt resistance prevailing even among the Muslim countries to adapt the shariah (Khorshid, 2004). The basic reason the research conducted on the particular fact shows that the Islamic scholars and the critics are of the idea that they cannot innovate or develop new products keeping in view the Islamic perspective, as they believe that the financial institutions should come up with innovative to solve the economic problems of the people. Hence the value of innovations cannot be denied as far as financial institutions are concerned. But Islamic perspective on the other hand states that all the necessary innovations in the financial domain of a country or region should be based on the shariah only and any innovation that goes against the prescribed pattern is considered a straight sin (Esposito, 2006).
Other than the new product development strategies in the Islamic banking also takes into account the risk factor. But the contemporary economist does not support this idea as the Islamic perspective promotes the concept of profit and loss sharing. The customers and the market place might absorb in the charm of profit sharing but the clear cut approach of Islamic banking towards the loss sharing serves to boost the resistance. As a matter of fact the customers analyze the performance of the banks on the basis it’s their profitability and risk factor.
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