Abstract

ABSTRACT The present financial system is indulged in creation of money instead of value. This is being done through creation of debt and bidding up of assets values in the financial markets. In the backdrop there are some important questions which are to be answered. Firstly, are the money and capital markets working correspondently to their ability of generating real goods and services? Is the growth rate (real) of a country is reciprocal to the finances being applied? Is the requirement of goods and services of whole world population being met? The answer to all these and similar questions is in negative. The situation is forcing us to look into a new financial system. Further there is a dire need that we should develop new financial institutions which may create value instead of creation of credit and money. One of the important characteristics of Islamic financial system is that it creates values through creation of more and more good and services. If we want financial institutions to create value we should shift to Islamic financial system.