Death Penalty: the Christian View

In almost every society, there are crimes and violations of human rights. To deal with these things, there are laws that prescribe the prevention of their occurrences. However, if the law is broken, commensurate punishment is put on the violator. Depending on the seriousness of the crime, the punishment may be light such as imprisonment for up to one year with corresponding fines, or it could also be severe as death penalty. Capital punishment or death penalty is usually imposed on persons who committed heinous crimes and are those that endanger the safety of the society. Some countries and societies implement capital punishment while others do not. There are various reasons for this policy of countries, including the social view on the death penalty and the prevailing religious view in the society among others. One of the foremost arguments for the imposition of death penalty is that it acts as a deterrent for heinous crimes. Most societies throughout history have used capital punishment. Governments have also used this extensively to execute persons that do not conform to the laws and standards of conduct in the society. Throughout history, capital punishment was also used to suppress political dissent and to preserve the prevailing order in the society. Nowadays, the death penalty is being imposed on capital crimes such as treason against the state, espionage, and murder. In other countries, crimes that are of sexual nature such as rape, sodomy, and adultery are also punishable by death. Human trafficking, plunder and corruption, as well as drug trafficking are also punishable by death in other countries. The foremost reason being given for the imposition of capital punishment is its power to deter crimes. The argument says that if heinous crimes are punishable by death, would-be perpetrators of such crimes would protect their lives and they will not commit heinous crimes. On the part of the victims of such crimes, they also receive justice and redress for the injury through the capital punishment. On the other hand, capital punishment is a lot less expensive than life imprisonment (Paternoster, 1991). There are a lot of debates surrounding the imposition of capital punishment. Almost all countries in Europe, as well as in the Pacific area, and Latin America have abolished capital punishment in the name of respecting and protecting human rights. There are still a large number of countries that retained it, however. The United States Federal government with 36 States has retained it. Brazil imposes capital punishment only during wartime while countries in Asia and Africa also retained it. Notably, South Africa does not have capital punishment in spite of the high incidence of violent crimes such as murder and rape. South Korea no longer imposes capital punishment, as well as Uzbekistan, because it was not being used for a long time. A number of individuals, organizations, and human rights advocates object to the imposition of capital punishment. The questions they raise concern the effectiveness of capital punishment in deterring crimes. Moreover, there is always the possibility that the innocent person will be sentenced to death. Once the penalty is imposed, it can no longer be undone even if a separate investigation will render the accused as innocent from the crimes. There are also a number of instances in which minority groups are discriminated against in imposing capital punishment. Minority groups usually have lesser access to the best lawyers. As such, they run the greater risk of being proclaimed guilty for the crimes for which they are accused. With capital punishment, once death penalty is imposed, it is final. The person will have no chance to reform his ways or redeem his actions. He has been condemned by the courts to be forever separated from the rest of the society. In the 62nd General Assembly of the United Nations in 2007, the UN passed a resolution calling for the universal ban on capital punishment. This resolution asked the member-states of the UN to impose a moratorium on imposing the death penalty with the eventual plan of abolishing capital punishment. This resolution was made in recognition of the human rights of accused criminals and the possibility of redemption and change. Various religions also have varied responses to capital punishment. Even a particular denomination or religious group may not have a unified stand regarding capital punishment. Religious sentiments do play a significant part in the views of people regarding capital punishment. The Bible is replete with various passages that may seem to support or condemn capital punishment. The Old Testament, particularly, is based upon a morality of â€Å"teeth against teeth† and â€Å"life for life. † The books of laws of the Old Testament actually prescribe stoning to death the persons who commit serious crimes against God and against the community. A number of biblical scholars have considered the part of the Ten Commandments that say â€Å"You shall not kill† as a prohibition against individual cases of murder (The Ryrie Study Bible, Exodus 20:13). In the first place, the Christian faith believes that humans are created in the image of God. As such, a serious crime against another person is also a crime against God. In the Old Testament, premeditated murder was sufficient reason for the death penalty (Numbers 35:31, 33). Moreover, in Genesis 9:6, it can be read that â€Å"whoever sheds the blood of man, by man shall his blood be shed†. St. Thomas Aquinas also published his thoughts regarding capital punishment. He said that â€Å"the civil rulers execute, justly and sinlessly, pestiferous men in order to protect the peace of the state† (Summa Contra Gentiles, III, 146). Furthermore, St. Thomas Aquinas talked about the need to impose death penalty on the crime doers. â€Å"The fact that the evil, as long as they live, can be corrected from their errors does not prohibit the fact that they may be justly executed, for the danger which threatens from their way of life is greater and more certain than the good which may be expected from their improvement. They also have at that critical point of death the opportunity to be converted to God through repentance. And if they are so stubborn that even at the point of death their heart does not draw back from evil, it is possible to make a highly probable judgment that they would never come away from evil to the right use of their powers† (St. Thomas Aquinas, Summa Contra Gentiles, Book III, 146). The sacrifice of Jesus Christ on the cross is at the centerpiece of Christianity. Without such sacrifice, there would be no Christian faith. Such sacrifice is also a form of capital punishment in the sense that he bore the sins of the whole world. Such sin therefore requires the death penalty and Christ willingly went to the Cross to satisfy the requirements of a just and loving God for the remission of sins. Although the Old Testament has a number of provisions for death penalty, the New Testament appears to emphasize the love of God. This has been seized by anti-capital punishment advocates in moving towards the abolition of capital punishment. John 8:7 (NIV) of the Bible, which reads, â€Å"But Jesus bent down and started to write on the ground with his finger. When they kept on questioning him, he straightened up and said to them; â€Å"If any one of you is without sin, let him be the first to throw a stone at her. † is being taken as a passage supporting the abolition of capital punishment. In this regard, the sixth commandment is also being preached in a lot of churches as a prohibition against capital punishment. Several Christians also point to the love and grace of God as reason why capital punishment should not be instituted. Following this line of argument, it means that criminals are being given the maximum time for the possibility of repentance and redemption. With God’s grace and love, even criminals may still get a chance to reform their ways. Christian groups have diverse opinions and individual Christians do have the choice for their own preference and view apart from the official stand of their churches. Historically, the Roman Catholic Church accepted capital punishment based on the theology and views of St. Thomas Aquinas. The reason behind this is the way in which death penalty can deter and prevent crime. It is not a means for revenge. However, during the time of Pope John Paul II, the Roman Catholic Church revised this position. This position was defined by Pope John Paul II through the encyclical he released entitled Evangelium Vitae. As a result of this, the Roman Catholic Church now believes that capital punishment is not the best way to deal with crimes. Rather, capital punishment should be avoided except in cases where it is the only means available to defend the society from the criminal or offender. Given the present situation of penal systems, such need for execution is virtually non-existent. According to the Catechism of the Roman Catholic Church, â€Å"Assuming that the guilty party's identity and responsibility have been fully determined, the traditional teaching of the Church does not exclude recourse to the death penalty, if this is the only possible way of effectively defending human lives against the unjust aggressor. If, however, nonlethal means are sufficient to defend and protect people's safety from the aggressor, authority will limit itself to such means, as these are more in keeping with the concrete conditions of the common good and are more in conformity to the dignity of the human person. Today, in fact, as a consequence of the possibilities which the state has for effectively preventing crime, by rendering one who has committed an offense incapable of doing harm – without definitely taking away from him the possibility of redeeming himself – the cases in which the execution of the offender is an absolute necessity are very rare, if not practically nonexistent† (Catechism of the Catholic Church, no. 2267). Given this position, the Roman Catholic Church has affirmed the sanctity of life through this position. Such position aims to affirm the dignity and rights of a person even if he has committed some crimes. The position promoted and adopted by the Roman Catholic Church through Pope John Paul II is a revolutionary one and it is in keeping with the prevailing views in the world today regarding the abolition of death penalty. Depending on the stand of the churches, more liberal groups tend to be abolitionist, meaning they want to abolish death penalty. The more conservative denominations of Christianity tend to support the imposition of death penalty. Protestant Christian Churches also have their official stand regarding capital punishment. The Anglican and Episcopalian churches has opted a policy that condemns death penalty in 1988 through the Lambeth Conference of Anglican and Episcopal bishops. The United Methodist Church, as well as other Methodist churches all over the world has taken the position against capital punishment. The church says that it cannot support capital punishment on the basis of social vengeance and retribution. More importantly, capital punishment tends to be imposed more frequently to marginalized sectors of the society such as the uneducated, ethnic and racial minorities, the poor, and the disenfranchised. The General Conference of the United Methodist Church, which meets once in every four years, asked its bishops to oppose capital punishment and advocate for governments to impose a moratorium on the implementation of death penalty (United Methodist Church website, 2007). The Lutheran Church in America also opposes the death penalty. Such decision was made in 1991 through a social policy statement that the church released. The policy stated that vengeance is the main reason for the imposition of capital punishment. Furthermore, the Church believes that repentance, forgiveness, and redemption are necessary for true healing to be accomplished (ELCA, 2007). With this policy, the Lutheran Church joins the throng of Christian churches that support the abolition of death penalty. Given these stands of various churches, most denominations appear to support the abolitionist position. The interpretation of these churches of the Christian faith is one in which God’s love and mercy takes precedence over the imposition of punishment on the erring party. There are still churches within the Lutheran tradition that supports death penalty. They cite the stand of Martin Luther regarding death penalty and the way that this represents the justice of God. This also means that churches are now more and more in sync with the ideas and movements of other cause-oriented groups in the society. As time moves on, the views of Christian churches are also changing. There is almost a universal consensus regarding the importance of abolishing death penalty. For Christians, however, there are important issues at stake. This also concerns the emphasis on God’s justice, or God’s love. This also has an implication on the advocacies and ministries of Christian Churches. Traditionally, Christianity has emphasized the justice and the holiness of God and the way in which humans fall short of this. Moreover, justice means equality for all and that people get what they deserve. Given this framework of understanding, capital punishment is necessary. In recent years, however, there has been an emphasis on God’s love and grace. This means that the churches have redefined their role to dispense grace and promote forgiveness, healing, and reconciliation. This does not sit well, however, for the advocates of capital punishment. Because the major denominations such as the Roman Catholic Church, the United Methodist Church, and the Lutheran church have worldwide presence, this means that the abolitionist perspective has a better chance to be propagated all over the world. In this regard, the Christian church is working hand in hand with the United Nations, Amnesty International, and other human rights groups in promoting the dignity of humans. If the advocacy of rights groups and the churches succeed, this means that more and more countries might forego the capital punishment in the coming years. The effects of this on the incidence of crime and the social and governance policy of governments all over the world remain to be seen.

Summary of Human Resource Management

It is very important that human research management to transform from being primarily administrative and operational to strategic partner. The reason is it important is because the human resource department plays a crucial role in determining the culture of an organization. Human resources promote and implement policies and procedures. The key areas are hiring practices, compensation, management relations and employee conduct and behavior. The decisions made by the human resources department will effect an organization in a positive or negative way. The areas that will feel the impact or challenges will be creating awareness, compensation plans, hiring practices and behavior. â€Å"The role of the Human Resource Manager is evolving with the change in competitive market environment and the realization that Human Resource Management must play a more strategic role in the success of an organization. Organizations that do not put their emphasis on attracting and retaining talents may find themselves in dire consequences, as their competitors may be outplaying them in the strategic employment of their human resources†. The human resources department can give the benefit of showing management what the culture is really like. What is revealed may lead to positive changes in the organization culture, it could also lead benefits that the employee’s need. The human resource office can also help management decide if there is a need for change or eliminate programs that are not necessary. The human resource depart is vital when it comes to compensation because it is responsibility for the design or layout programs for the organization. A lot depends on how well the human resource department does their job, such as the positive and negative impact on organizational culture. It is instrument that the HR department creates a plan with an incentive program for employees, which could motivate the employees and increase productivity. If productivity is up, then I believe they are headed in the right direction. The human resource department also determines the hiring and recruiting practices used by the organization, which has a great impact on the organizational culture. The relationships between a successful business and Human Resource Management have to be incorporated into an organizations plans and strategies to be able to maintain longevity of success. The history of the development of human resource management can be traced back to the early 1900s. Human resource manager’s original function was to basically manage the relationship between businesses and labor unions. Galbraith and Nathanson developed a model for the human resource management function that divided the human resource management function into four basic sub functions. The human resource management function was divided into seven parts. Human resource management are viewed as an essential part of an organization, also seen as a necessary to deal with labor unions. Human Resource Management focuses on securing, maintaining, and employing an effective work force, which organizations can strive. Human Resource Management involves a variation of activities, which include recruitment, and screening employees, preparing training needs, analyze human resource forecasts, compensation systems, and an understanding of the laws. The Human Resource Management function has evolved significantly since the early 1900. The Correctional Service of Canada (CSC) was undergoing a renewal period. With renewal and change, it is essential for the human resource management function to adopt a strategic role in order to support and enable CSC ‘s business drivers. CSC is in the people business, and people and positive relationships comprise our most important asset; this is essential for fulfilling our public safety mandate. Every person at CSC has a role to play in helping to achieve the results set out in this Plan. CSC ‘s managers have shared accountability for these results. The Assistant Commissioner Human Resource Management is accountable for setting the foundation and people services that will enable managers to meet their business goals efficiently and effectively. The Deputy Commissioners and Assistant Commissioners, and managers and supervisor within their region or sector, are accountable for the implementation of good human resource management to provide a healthy workplace and ensure a productive and innovative workforce, and enabling learning and development. Employees are responsible for being a partner to create a healthy workplace, productive and innovative workforce, and for their learning and development. Regional support for the Plan will be assumed primarily by the Assistant Deputy Commissioners of Corporate Services. [Full description of figure: CSC's Program Activity Architecture] This Strategic Plan for Human Resource Management covers the period of 2009-2010 to 2011-2012. The Plan integrates CSC's business lines as found in the Program Activity Architecture and as outlined in the CSC Report on Plans and Priorities (RPP). In December 2007, after completing an in-depth review of the federal correctional system, an Independent Review Panel delivered its report, A Roadmap to Strengthening Public Safety. The human resource management priorities are aligned with the Review Panel's observations and recommendations. The CSC Review Panel endorsed CSC ‘s Strategic Plan for Human Resource Management for 2007-2008 to 2010-2011. The Review Panel developed a set of recommendations to respond to issues that came out of discussions with frontline staff and to the underlying issues CSC must address in order to further the strategic priorities outlined in the Plan. The following chart provides a summary of the Panel's recommendations. These recommendations are integrated throughout this plan. Full description of figure: Human Resource Management] In endorsing the previous Strategic Plan for Human Resource Management , the Panel stated that â€Å"CSC ‘s priorities in matters related to human resource management must ensure that practices are robust and effective to allow the organization to deliver on its key operational priorities and other activities in a cost effective manner, and that this is done in a way that is consistent with public service values that are essential to a healthy workplace and to the confidence and trust of Canadians. † 2 This statement is as true today as it was then, and whil e the previous 2007 CSC Strategic Plan for Human Resource Management achieved a number of milestones and brought ownership and accountability to CSC leaders by placing important HR issues on the organization's agenda, there is still much work to be done. This Plan builds on the results of the initiatives put forth in the previous plan and continues to build on those important achievements to further support the organization in meeting its evolving business needs and the Government's overall public safety agenda. Regional and Sector activities in the area of human resource management and services flow from this Strategic Plan. Integrated into the foundation of services provided by human resource professionals in all regions and at national headquarters in support of CSC activities, are plans and measures related to CSC priorities. Of importance in the medium and longer term is forging relationships and engaging our partners to continue to build on the current foundation of human resource management, and investing in our people through several key activities outlined under these three priorities. These priorities and key activities, including Public Service Renewal, will bring about improvements in human resource management in support of CSC's transformation and business objectives. The organization that I would like to discuss is actually the United States Air Force. As the Career Assistance Advisor, I work with the hiring officials and putting the proper individuals with the right job. There is a process that the Human Resource department has to follow and it is imperative that they get it right. Each year the military need individuals in certain positions that meet certain criteria fill jobs. The HR department at Randolph Air Force base has to work closely with organizations or units to fill their manning needs in order to support their mission. There is an analysis of manning done for each career field to determine if a position needs to be filled, once that is determine, HR department matches members with the location and job. Also, each year the Air Force determines that some career fields are over manned and some are short manned. This situation creates a need for hiring for the short manned career field to meet the Air Force retention goals. The HR department works with units to fill special duty, regular and chronic critical jobs. The HR department finds out the needs and requirements for the positions from the units. Then the HR department creates the advertisement and screens the applicants that apply to ensure that they make the right decision based upon the needs and requirements. The HR department must ensure that the applicants meet the requirements, because when they do hire the individual, there is a lot that follows. The first thing to follow in getting the individual trained which might require technical school. The next step is getting the member to the new job location, which both cost the government money to do. The HR department that I deal with on a daily basis does a thorough job of ensuring that the individual is even eligible, before they go any further in the process, so by doing so save the government time, money and resources. The HR department is the key to keeping the Air Force properly manned and ready at all times for the mission. (2013, 02). Discussion Essay Questions. StudyMode.com. Retrieved 02, 2013, from http://www.studymode.com/course-notes/Discussion-Essay-Questions-1428542.html http://www.zeromillion.com/business/hrm.html (function() { var scribd = document.createElement("script"); scribd.type = "text/javascript"; scribd.async = true; scribd.src = "https://www.scribd.com/javascripts/embed_code/inject.js"; var s = document.getElementsByTagName("script")[0]; s.parentNode.insertBefore(scribd, s); })()

Strategic management 1 Essay Example | Topics and Well Written Essays - 750 words

Strategic management 1 - Essay Example The fundamental intention of the value chain structure is to make the most of value formation whereas playing down the expenditures. When managers seek to recognize the primary actions within the organization which make up the organization’s value chain, as well as, a competitive advantage that is sustainable to the organization, value chain analysis technique is the most preferred by the managers. The competitive advantage that is enjoyed by an organization stretches out in its capability to carry out vital actions along the value chain better compared to the organization’s competitors. In the endeavor to explain the significance of the value chain analysis technique as a tool for strategic management in an organization, Toyota Motors Company is the focal point that this paper bases its argument. The value chain analysis is run cautiously by linkages which happen to be a crucial competitive advantage source. The value chain analysis fundamentally involves the linkages of both areas. The chain connects the worthiness of the organization’s actions with its primary operational segments. Thereafter, the distinguishing of the involvement of every segment in the general added worthiness to the commercial interest is formed. In line with conducting a value chain analysis, the organization is divided into the most important and holding up actions. The most important actions are concerned with the production activities by the company, whereas the holdings up actions are involved with provision of the necessary background efficiency and effectiveness of the organization including the management process by the human resource. Internal analysis is involved with recognizing and evaluating resources, their capabilities, as well as, the central part competencies. Therefore, it is im perative for organizations such Toyota Motors Company to comprehend that the

A qualitative research critique Essay Example | Topics and Well Written Essays - 4500 words

A qualitative research critique - Essay Example Concerning these challenges, there are various guidelines developed in the past few years that can be utilised while examining a qualitative research paper, such as the Critical Appraisal Skills Programme (CASP) framework (Mack & et. al., 2010). There are various aspects which needs utmost consideration while critiquing a qualitative research. For instance, the coherence of the topic being critiqued should be appropriate for the qualitative enquiry (Boswell & Cannon, 2010). It is also vital for the literature review to be consistent with the methods that has been selected for the study. The article chosen for the critique also needs to possess sufficient account regarding the informants, the chosen subject matter as well as the researcher(s). In addition, there must be adequate description regarding the methods applied for information assembling as well as information analysis. It is significant for an effective critique to possess a sound conclusion (Forchuk, & Roberts, 1993). With due regards to these aspects, the purpose of this discussion is to demonstrate how a particular qualitative research paper can be critiqued by using CASP framework. The article that will be examined is â€Å"Like a Trip to Macdonald: A Grounded Theory Study of Patient Experiences of Day Surgery† by Anne Mottram. ... bed as a form of social enquiry which emphasises upon the approach of interpretation conducted by humans concerning a particular issue effectively utilising their understanding. The major objective of a qualitative research is to acquire a better understanding about the social reality witnessed by the individuals along with the prevailing cultures and groups (John Wiley & Sons, Inc., n.d.). In other words, the idea of qualitative research is often described as the procedure of gathering, interpreting as well as analysing data by examining the activities of the individuals. It is duly based upon subjective matters implementing various crucial approaches such as focus groups and interviews in order to collect valuable information (Flick, 2009). It is in this context that the nature of qualitative research is viewed to be an open-minded as well as an exploratory one. Even though, a qualitative research approach tends to reflect a wide implication on the identified issue, it is considere d to be less costly in comparison to other researches. It is broadly regarded to be an effective process in the area of obtaining necessary information about the communication requirements as well as the responses of the people along with their views concerning specific issues or rather concerns (Anderson, 2006). Moreover, the facet of qualitative research is also defined as a kind of research which is dedicated towards developing an improved understanding of various human approaches along with their behavioural attitudes. The studies which are involved with the qualitative research usually embrace case studies, ethnographies and also descriptive studies (Oxford University Press, n.d.). Apart from the studies, the different methods associated with qualitative research include observations

Successful International Assignment Example | Topics and Well Written Essays - 750 words

Successful International - Assignment Example By knowing their culture, their mindset can be according to the traditions and culture of the place they are relocated. This allows the individual to adjust better and refine their adjustments to be more accurate. In this case, Fred Bailey seems to be very excited about his shift, thus showing his interest. Cross-culture training is vital to ensure that the individual knows exactly how to react and behave in the given situation which also improves the adjustment to a job (Eschbach, Parker& Stoeberl). This training includes not only the procedures of the job but also how to interact with the nationals of the host country and the environment in general. But the problem during this pre-departure preparation is the individual's concentration on logistical problems which prevents them from paying attention to any form of training. Fred Bailey Previous experience in the international arena is considered as an asset to help in adjusting to a new atmosphere. However, many individuals lack this knowledge. Thus, there ability to the deep culture is greatly reduced. Without any pre-departure training, many individuals face culture shock and find it difficult to adjust to the new environment. The organization should also ensure that their employees are aware of the degree of difference between the organization in their own country and the one they are changing to. If the foreign institute has a different operational method then it will be harder for the expatriate to fit into the organizational structure. For instance, Bailey does not understand the Japanese inability to hold proper communication with the head of the organization. All of them hold are unable to hold a interactive discussion with Bailey which leads to frustration on his side. Also, it is very hard for an employee with a family to move to a new country, especially if the logistics include a family. By providing support to the individual, the organization can remove problems like finding housing and schooling. In this way non-work problems can be easily solved, allowing the expatriate to adjust easily to the general environment. In this case Fred Bailey is prevented from being too happy about the move because of the wife and children that will accompany him. Not only does this curtail the interest in the new job but the children's shift in schools and environment will be an added burden on the parents' minds. Along with this, Fred's wife finds the move to be difficult and eventually ends up wanting to leave instead of adjust. This is especially important when the native and host culture are greatly different. Adjustment for the employee and their partner's interaction with the environment is difficult because of their inability to behave appropriately. The greater the cultural difference between the environments, the easier it is to make cultural mistakes which can lead to immense frustration about the errors (Lowe, Downes & Kroeck). The co-workers in the host organization play a vital role in allowing the new member to fit into the environment. They provide emotional support to the new employee with their acceptance and also teach them how to follow the ropes. In this case, Bailey hardly gets any feedback from his fellow employees. Instead he feels alienated and different from the

International business Essay Example | Topics and Well Written Essays - 1250 words

International business - Essay Example Combustible energy sources like coal, oil and wood emit environmental pollutants and contaminants. Only those sources that offer minimal contamination to the environment are deemed acceptable if they are to be sustainable. The sun is the cleanest source of energy with its free-of-charge irradiation and easy access all over the world. The sun’s irradiation can be converted to usable energy via hybrid conversion, simultaneously, into electrical and thermal energy (Afgan, 2008: p240). This involves the use of hybrid collectors that differ from thermal collectors due to the construction of their absorber, with solar cells, water flow tubes, and a metal system. The collectors can be used in hospitals, private companies and small industries. Compared to ordinary solar panels, the hybrid collector ensures better usage of space, savings during construction and the simultaneous conversion of solar energy into electric and thermal, current using one device. They are contemporary and eco logically clean. Sustainable development can be defined as the as the integral cultural, social, technological, and economic development that is adjusted to the requirements of environmental protection, thus enabling present and future generations to satisfy their needs and improve their quality of life (Afgan, 2008: p242). The underlying principle of sustainable development is the creation of an effectual system of distribution and application of resources over the long-term. Sustainable development focuses on the rational use of the earth’s natural treasures, with the concept oriented towards life upgrading and improvement of environmental quality. In order to accomplish sustainable development, there is a need to provide sustainable energy. This means that future development needs to be based on the lowering and strict control of environmental emissions and the use of renewable and clean energy (Afgan, 2008: p243). The cleanest source of energy that can aid in the achievem ent of this goal is solar energy. For five billion years, the sun has been sustaining and enabling life on earth. The sun’s rays have provided energy for growth, as well as development, of plants via the process of photosynthesis. Now, it is time for the sun to power our industries and drive development around the world as a sustainable energy source. Key Words; Solar energy, solar collectors, sustainable development 1. SUSTAINABILITY Solar energy is one of the main sources of clean and sustainable fuels. The main source of power or the fuel is suns rays that falls on the earth. Solar collector that is used to generate power using suns rays is essentially a sustainable system. The main reason as to why this is called sustainable is that the energy source continues to provide limitless energy. Unlike finite sources of power such as oil or coal, there is no depletion of power. While creating energy, carbon is mot emitted in significant quantity. It is true that some amount of c arbon is released and conventional power consumed while making the solar panels and solar cells and while manufacturing components such as solar collectors, inverters, batteries, electrical lines and cables and other such components. However, these are one-time costs only. The process of power generation and consumption remains sustainable and perennial. It meets the definition of sustainability where the needs of the present are met and the needs of the future generations are not compromised. There is almost zero impact on the environment due

Value at Risk framework and its utility in Risk Management Assignment

Value at Risk framework and its utility in Risk Management - Assignment Example filed bankruptcy due to failure on their part to manage risk during the financial disaster that occurred in 1990s. If there is not proper management or poor supervision, then billions of dollars may be lost when a financial disaster occurs. VaR is a technique of evaluating risk that employs standard statistical methodologies employed on regular levels in other technical fields. VaR reviews the worst financial loss over a target perspective that will not be surpassed with a given intensity of confidence. Footed on strong scientific groundwork, VaR offers its users with an outline evaluation of risk in market. â€Å"For example, a financial institution might inform that its VaR of its trading assortment on a daily basis is $10 million at the 98% buoyancy or â€Å"confidence level†. This mean, there is only 1 opportunity in a 100, under typical market scenario, for a financial loss higher than $50 million to happen. This single number recapitulates the bank’s vulnerabilit y not only to the prospect of an unfavourable move but also to market risk.† It evaluates the risk employing the analogues' units as the bank’s bottom-line dollars. ... As a result, it is truly a futuristic risk evaluation. VaR is applicable to all financial instruments though in the initial stage, it has been applied only to derivatives. (Jorion 2007: ix) 2- Background Every morning, in J.P Morgan Chase, the global head of Market risk receives a bulk report that summaries the value at risk (VaR) of the bank. JPMorgan Chase's bank’s global risk management system is generating this report during every night. Today, many brokerage firms, many banks, investment funds and even nonfinancial companies employ analogues methods to estimate their financial risk. Securities market regulators, private sector groups and banks have widely acknowledged statistical based risk management strategies like VaR. (Jorion2007:18). Till Guldimann can be said to be the father of the concept VaR while he functioned as the head of global research at J.P Morgan in the late 1980s. J P Morgan’s risk management group had to decide whether fully hedged meant making investment in long-maturity bonds, thus creating a fixed and stable revenues but oscillations in market value or investing in cash thus making the market value as fixed. The J P Morgan bank concluded that â€Å"value risks â€Å"were more significant than â€Å"earning risks† resulting from the invention of VaR. (Jorion2007:18). During that period, there were more concerns in the bank about managing the risk of derivatives. The Group of Thirty (G-30) which had a delegate from J P Morgan offered a way for deliberating best risk management techniques. Through the G-30 report which was published in July 1993, the term VaR term found its way. (Jorion2007:18). On June 26, 1974, the German authorities closed a troubled midsized bank namely

Proposal for Emerging Technology Essay Example | Topics and Well Written Essays - 250 words

Proposal for Emerging Technology - Essay Example The research will provide IT professionals to understand different aspects of cloud technology being used by car manufacturers to allow the drivers to conduct dashboard dialogue. This will allow the cars to be connected to the human- efficient processes. The research will allow different organizations as an aid of content work (Staff, 2011). The research can also be helpful for the business practitioners who aim to undertake cloud technology for manufacturing cars with the dashboard dialogue for staying connected on the go. There has been negligible research done on the possibilities of connectivity through cloud technology. Thus, this research will allow the IT professionals and business enterprises to attain broader spectrum (Staff, 2011). Staff, C. (2011, November 11). Ford Cloud-Connected Car to Make Debut at 2012 International CES. Retrieved November 14, 2012, from CEA:

How has McDonald's change in the last 5 years in UK Essay

How has McDonald's change in the last 5 years in UK - Essay Example The major success of McDonalds is based on this franchisee business model. Approximately 70% of McDonald's worldwide restaurant businesses are owned and operated by independent businessmen and women, our franchisees. McDonald's first restaurant in UK was opened in 1974 in the province of Woolwich. This was owned and managed by the company directly. It was in 1986 that McDonalds started franchise model of business by opening franchise restaurant. Since then number of franchise restaurants in UK has been on steady rise. In this paper, we analyze how the structure of the McDonald's business model and how has it changed in UK. Today Big Business has a strength is the market. McDonald was able to make use this big branding image in UK market. It is natural that large business corporations account for major shares of output, employment, investment and trade. This article reviews five aspects of McDonalds during the last five years from 2001-2006. The major points we are going to discuss are 1. role of the large corporation as a feature of the UK economy 2. role of its business leaders 3. the managerial revolution 4. existing business environment and the size of Britain's large companies relative to other parts of the country. The beginning of this period is marked by a real testing periods for many corporates. Companies need to look for new business models to survive in this context. Understanding the managerial practice of McDonald, it will be meaningful to understand the objectives and concepts of re tailing. In the McDonald's franchise business model they will be supported by the world famous McDonald's system, in the areas of operations, training, advertising, and marketing to name but a few. McDonald's franchises restaurants to individuals only. Never to companies, partnerships, family groups or passive investors. Franchisees run their restaurant(s) as an independent business. They are responsible for driving the business forward and all normal business functions i.e. recruiting, marketing, accounting and administration and managing and representing the brand in the local community. Independent companies supply all raw materials, goods and services to each restaurant. All products used in the restaurant should have approval of the parent group. McDonald's Franchise Agreement is for twenty years. The competition in the food retail sector in UK is growing and the future of foodstuff trade belongs most likely to the retail chains. The retail chains in UK are fairly developed, as they do not differ much from the corresponding developing retail formats. The competition has increased with the entry for retail chains. The share of retail chains of the whole retail trade is at the moment estimated to be around seventy percent, they are taking over the markets at a rapid pace at the expense of unorganised forms of trade. The presence of large retail chains has an impact on the production side also. In the food production sector the competition is fierce, as big UK and foreign producers want to ensure their piece of the huge demand potential. Thus the largest producers are relentlessly utilising their size: they invest in big marketing campaigns and are willing to pay high entry fees to retail chains in order to secure a place on the store shelves and build a strong brand also in UK. Information on

The Marketing Plan Essay Example | Topics and Well Written Essays - 2250 words

The Marketing Plan - Essay Example food and beverage due to its wide range of product lines such as Arnott’s Premier Melting Moments, Emporio Amond Snap, and Emporio Chocolate Temptation etc presenting a unique taste. However, in spite of strong foothold in numerous developing and developed countries, the competitiveness and market share is decreasing due to its locally utilised ingredients of Australia. Other than this, the profit margin and customer loyalty over the brand is decreasing due to extremely high price and intensive competitive rivalry among its rivals. In addition, to the presence of numerous substitute products like cookies by competitive brands such as Kraft Foods Ltd, Tim- Tams, Vita-Wheat, and Cruskits, the market value and reliability of the organization is declining day by day to a considerable extent. Due to these underlining causes, the portfolio and uniqueness of the organization of Arnott is reducing that hinders its total sale and profitability in long run. Furthermore, numerous less co mpetitive local products are capturing the markets of Australia that hindered its loyalty and brand value as compared to other existing contenders in this age (Arnott, 2014). However, in order to amplify the competitive advantage and sustainability of the organization of Arnott, a marketing plan is developed with the help of a new product, Emporio Crispy. The financial objective of the organization of Arnott is to amplify its total sale by almost 5 percent of its previous sale by the launch of the new product, Emporio Crispy. Other than this, the profit margin of the organization of Arnott might get enhanced by a considerable extent as compared to its rival players. Only then, it might become successful in improving its dominance and position in the market (Grant, 2010, pp. 423-434). The marketing objective of the organization of Arnott is to amplify its loyalty and reliability in the market of Australia. Along with this, the launch of the Emporio Crispy might become successful in

Playing God in Todays World Essay Example for Free

Playing God in Todays World Essay The two fictional characters who â€Å"play God† in their own lives are two doctors, one of philosophy (Faustus) and one of medicine (Frankenstein) and, in real life, it is anyone who takes power over another’s and one’s own life and makes up his/her own rules which go against the commandments given to us by God as the athlete Lance Armstrong did during many years. First, there is Dr. Faustus, a very famous and successful scholar. He is a smart man who knows everything about almost all sciences in the world, including philosophy, theology, law, and medicine. Yet, this knowledge is not enough for him. He is greedy and obsessive about it and the more he learns, the more he desires. Soon, all that he knows makes him extremely bored; there is only one science that gives him excitement magic. â€Å"These books by magicians- lines, circles and mysterious drawings- Yes, these are the books that I enjoy the most. Oh, what a world of power and reward they promise the hard-working student! With this knowledge, I’ll be the master of everything that moves on Earth†¦ this is your answer Faustus. Use your brain to become a god† (Marlowe 22). Faustus is willing to do anything to be the greatest in this field, so he decides to sign an agreement with the Devil and give him his soul in exchange for 24 years of magical talents and power over life itself. After this agreement is set, Faustus gets all the unimaginable power in life; learns all that he wants about this forbidden science; brings people back to life, and earns worldwide admiration and recognition for his work. Nevertheless, none of these God-like powers and tricks of magic bring him happiness. Deep in his heart he knows he is doing wrong and he will be damned forever. At last, he ends his days being lonely and is punished forever in hell. Clearly, Faustus tries to play God, but at the end, the only thing he does is to bring God’s anger upon himself. â€Å"With paper wings he flew too near the sun and heaven planned his downfall† (epilogue). Secondly, there is Victor Frankenstein, a man who has everything he needs plus a very happy family. He is a great man, who is dedicated to his studies and very clever, but he makes the same mistake as Faustus did. He plays God by trying to discover the secrets of life, and when he does, he uses them the wrong way. When his mother dies, he has to leave his sad family and go to university to study medicine. There, he becomes obsessed with the idea of knowing â€Å"the secret of life† and how to help others not to feel the sorrow he and his family did because of the loss of a loved one. Soon, after much study about death and life, he finds the answer to all the questions in his head and starts to develop a horrible project. â€Å"He takes parts from dead people and builds a new ‘man’. But this monster is so big and frightening that everyone runs away from him – even Frankenstein himself! (Comment by editor). Victor is so terrified of his own creation that the only thing he wants is to escape from it so, irresponsibly; he abandons his laboratory and the monster, which has no idea of how to speak, survive, or live. †The monster is like an enormous baby who needs love. But nobody gives him love, and soon he learns to hate. And because he is so strong, the next thing he learns is how to kill† (Comment by editor). The monster is full of resentment and decides to make Frankenstein just an unhappy and lonely as he has been his entire life. He kills all people Frankenstein loves and makes Victor look forward only to the day that he can be dead and together with his family. Clearly, Frankenstein tries to play God, but at the end, the only thing he does is to bring unhappiness and misery to his life and his loved ones’. Finally, there is Lance Armstrong, a successful and rich cyclist who has won the Tour De France seven consecutive times. He has a lot of fans around the world and is considered a strong and admirable man by many people. However, after years of arduous denials and attacks on any person who has questioned his clams of competing clean, he has been proved to use performance-enhancing drugs since 1998. Now, he is disqualified from all his titles since that year and banned from professional cycling for life. Fans, friends, and family have gone away from him and now he is left only with the money that he has made, but today this does not seem to make him happy. He did a lot of mistakes through his career and personal life and used his cancer to justify them to himself. My cocktail, so to speak, was only EPO, not a lot, [blood] transfusions and testosterone, which I almost justified because of my history. Obviously, the testicular cancer and losing [a testicle], [I] thought, surely I’m running low. †(Armstrong’s interview with Oprah). The first mistake that he makes is to forget about his spiritual values and to start violating God’s law. Victory becomes his obsession and he is wi lling to obtain it at all costs. He is not only loosing his soul, but also damaging his body and reputation. Moreover, he has given false witness in front of millions of people and fooled everyone who believes in him. Again in this case, it is clearly illustrated how â€Å"playing God† can destroy someone’s life. Considering all the above, it is evident how obsessions can lead people to self-destruction. Armstrong, Frankenstein, and Dr. Faustus have made up their own rules and ways of living, according to what they want and not caring about how they are damaging themselves and the ones around them. They are all men of successes until God decides that it’s time to pay for the mistakes they have done; and at that point, it is too late to repent. The three of them have forgotten that life is not about what we accomplish, but about the way we do it.

Customer Awareness Toward Islamic Accounting Theory

Customer Awareness Toward Islamic Accounting Theory CHAPTER 1: INTRODUCTION 1.1 BACKGROUND OF THE STUDY Islamic banks considered as an active player in the world economies over two decades ago (Ahmed S., 2009). The principles accounting upon which Islamic banking is based have been universally accepted for centuries rather than decades. The fundamental principle of Islamic financial institutions is the prohibition of Riba (interest). It is manifest that Islamic accounting theory were practiced mainly in the Islamic country throughout the middle ages, development trade and business activities. In order to understand what services that Islamic banks offer, it is essential to maintain an acceptable level of information of the basis behind it. It has been argued that the Islamic banks have not introduced any new services since their first existence in the 1970s, in fact they have tried to comply with the rules of the Islamic religion specified for these types of actions. High requests to assess Muslim customers perception and attitude toward Islamic bank services. Islamic banks understand that its paramount important to measure the degree of its customers awareness as well as to improve services. The financial institution follows the rules that Holy Quran and hadith have set to guide the Muslims in their financial matters. The Islamic financial system employs the idea of participation in the project, utilizing the funds at threat on a profit-and- loss-distribution basis (Ahmed, S., 2009). 1.2 STATEMENT OF THE PROBLEM During the last three decades, Islamic finance institutions have been rising significantly, both nationally and internationally (Ahmed, S., 2009; Iqbal Abbas, 2007). These firms were recognized in the emerging market of the Middle East to meet the order of investors and borrowers who are motivated by income maximization derived from the Islamic law (Sharia). Islamic finance institutions offer an extensive range of Islamic financial innovations from the simple agreement of profit-sharing agreement (Mudaraba) that is parallel to time deposit in conservative banks, to issue Islamic bonds (Sukuk) and derivatives. In gulf countries, the state of Kuwait banking industry considered on of the leaders in Islamic financial market. The growth of Islamic finance institutions in Kuwait has attracted some of the conventional financial firms (e.g., NBK IFIH, and Citibank) to add the service of Islamic windows to their clients. In spite of the advantages that are fixed in Islamic finance system and management, Islamic finance institutions encounter numerous primary challenges to the prospect of being recognized internationally. The challenges exist in local as well as global markets. On of these challenges is to assess the degree of awareness in Islamic accounting theories. In their study, Gerrard and Cunningham (1997) reported that Muslim respondents, though aware of basic conditions in Islam, were almost wholly ignorant of the sense of specific Islamic financial conditions like Mudaraba, Musharaka and Ijara. As result, many Islamic financial providers seek to assess the level of social awareness of their tools that incorporate with Sharia. The understanding of customer degree of awareness are paramount important to determine firms endowment to promote Islamic accounting theories. Bankers also seek to explore the reasons behind dealing with Islamic banks to better understand and improve services provided. Another challenge that faces Islamic financial institutions is that, as service provided they have to understand customers perceptions and attitude toward the services provided to better understand customers need, want, and improve their services. With no understanding to customer perceptions and attitude Islamic banks may have no means to better develop their services and improve customer satisfaction and compete in the local as well as the international market. The current study seeks to assess the level of customers awareness of Islamic accounting theories and to explore their perceptions and attitude toward these tools that incorporate with Sharia. 1.3 OBJECTIVES OF THE STUDY Islamic financing is an important area of contemporary academic and policy interest. Opposing views in the area are analyzed in the light of empirical evidence. Measuring the degree of customer awareness toward Islamic accounting theory and their perception and attitude toward Islamic tools will shape the future of Islamic financing. The current study attempts to reveals the degree of customers awareness toward Islamic and efforts bestows to improve their awareness in order to assist Islamic financial institution to determine the efforts needed to raise this awareness and improve their attitude and perceptions. Another objective of this study is to explore customers perceptive and perception toward Islamic transactions thus Islamic financial institutions can better understand their customers and improve services provided. 1.4 SIGNIFICANCE OF THE STUDY Islamic banks provide many financial services and are competing heavily in the Middle East with conventional banks. Customers nowadays go for Islamic bank loans for buying home, cars and even business setup, as the conditions are very clear and there are no rising interest piling up. To overcome the fierce competition, Islamic bank need to bestow efforts in rising the degree of awareness toward Islamic accounting and finical tools and improve customers perception and attitude. The study is of general theoretical importance as well as of particular practical significance for policy makers who intend to conform their existing financial systems to Islamic rules. Furthermore, at the practical level, the study aims to assist Islamic bank manager in providing empirically evidence how of Kuwaiti customers aware toward Islamic accounting theory and Islamic financial services. The study also provide framework for bank managers in measuring customers perception and attitude toward Islamic services and their usage of various products and services offered. At the theoretical level, the current study aims to develop the literature of Islamic accounting theory and explain how these theories are to be implemented in the Islamic financial institution who adapts Sharia. 1.5 THE SETTING OF THE STUDY In the Gulf Co-operation Council there are growing number of Islamic banks are also taking steps towards greater clearness and stronger authority structures. The state of Kuwait for example, has been taking a number of steps to reinforce its local Sharia-obedient institutions, including slowly moving in the direction of a latest regulatory framework for sukuk. In conversations with OBG, manufacturing insiders explained that due to a lack of suitable legal mechanisms, Islamic finance companies are not allowed to issue sukuk in Kuwait, which forces Kuwaiti companies to work through other markets, such as Bahrain. Given the massive increase in sukuk issuance worldwide, pegged at nearly $17 billion (in the Gulf alone, the growth rate since 2001 has been nearly 45%), Kuwaits financiers are keenly aware of the need for proper rules regulating sukuk. Sheikh Salem Abdulaziz Al Sabah, the governor of the Central Bank of Kuwait (CBK), said earlier of 2008 that regulations are wanted, saying that the CBK is keen to provide a legal system to regulate Islamic investment tools such as the issuance of sukuk, especially in light of growing demand. We are optimistic a solution will soon be found. In state of Kuwait, the Islamic financial sector and its sharia-compliant companies are the increasingly global. Kuwait Finance house Bank (KFH), as an example, in addition to its Turkey, Malaysia and Bahrain ventures, newly established a subsidiary with a pair of Chinese firms to discover real estate investments in the Chongqing region of a middle China. In a more high-profile move, Investment Dar, one of Kuwaits biggest Islamic investment companies, recently funded a takeover of British luxury carmaker Aston Martin to the tune of $925 million. To achieve the purpose of the current study, the study focuses on a specific Islamic bank that located in the state of Kuwait. KFH has usually been one of the main engines behind the growth of Kuwaits sharia-acquiescent financial market; however, its enlargement and development indicates a growing maturity in Kuwaits sharia-compliant services zone, established by the push toward the regulation of Islamic bonds (sukuk) and the emergence of ever-stronger Islamic investment firms. KFH was the first Islamic bank in Kuwait and one of the pioneers toward adapting of Islamic accounting and financial theory in the gulf region. Beside the convenience, the research believe that exploring the degree of Islamic accounting theories of this bank may reveals highly reliable evidence of generalizing the finding in the state of Kuwait. KFH considered the main Islamic bank in Kuwait and the second-main bank of any kind in the country. Also to the huge injection of capital, KFH lately unveiled plans to set up its own subsidiary in Amman. The expansion of Islamic banks operations at home and overseas underlines the growing development of Kuwaits Islamic financial sector. Thus the study believe that investigating the customers awareness of Islamic banks toward Islamic accounting theory are justified and understanding their perception and attitude toward KFH is paramount important in attempting to improve service quality of Islamic firms. 1.6 LIMITATIONS OF THE STUDY This study is concerns with Islamic banking that located in the state of Kuwait as its difficult to include all Islamic banks related to resource limitation and time restriction. The study also does not analyze all Islamic accounting theory as it is very vast subject to control, rather than focusing on basic Islamic accounting theory that adopted by Islamic financial institutions and banks. Other limitation could be found related to: Sample size: The sample size for the bank customer is very large. Therefore, the collection of customer feedback will be costly in term of time and money. The study aims to attain around (150) survey for the purpose of analysis, which may considered one of the study limitation. Data collection: It may be difficult to distribute and collect all data and forms since the study is targeting to collect feedback from the entire bank customers. 1.7 DEFINITION OF TERMS The current study includes many Islamic terms and concepts that will be stated as in Arabic meaning, some of these concepts are: Halal: The actions or items that Muslims can have access to. Haram: The actions or items that Muslims are banned from Riba: What is known in the west as the interest. Maysir: It means Games of chance such as lottery, gambling and it is usually referred to as Haram. Takaful: It is a form of insurance in the Islamic religion which will be explained in the essay. Gharar: Deception, hazard, speculation, uncertainty, risk (literally, peril or hazard) Mudaraba: Is a trustee financing contract, where one party, the financier, entrusts funds to the other party, the entrepreneur, for undertaking an activity Mushakara: It is an equity participation contract, whereby two or more partners contribute with funds to carry out an investment Muqarada: Loan Participation Qard Hassan: It is a benevolent loan (interest free) Sharia: It is Islamic religious law derived from the Holy Quran and the Sunnah 1.8 THESIS STRUCTURE The current study includes five chapters: chapter one described the background of this study, and consisted of the introduction, objectives and significance of the research. Chapter two reviewed the literatures on Islamic banking and theories. Chapter three explained the research methodology. The data analysis techniques and research findings were demonstrated and discussions in chapter four. Finally, chapter five exhibited conclusions and future recommendation. CHAPTER TWO LITERATURE REVIEW Its necessary to explore the literature of Islamic accounting theory in details in this chapter. This chapter attempts to review previous literatures on the topic of Islamic Accounting Theory and provides recent finding related to the degree of awareness of customers toward Islamic financial services. This chapter attempts provide recent study and articles about Islamic accounting theory that explain the nature of Islamic banks system. Previous literatures and studies have revealed that the first recent research in Islamic banking filed was conducted in Egypt under cover, without projecting an Islamic picture, for fear of being seen as a demonstration of Islamic fundamentalism, which was abhorrence to the political government (Siddiqi l988). These studies remain until l967 where nine Islamic banks open in the country (Ready l98l). These banks was neither charging nor paying interest, investing mainly by participating in trade and industry, directly or in partnership with others, and shared the profits with their depositors (Siddiqi l988). For that reason, Islamic banks functioned basically as saving-investment firms rather than as commercial banks that based on charging interests. The Nasir Social Bank, established in Egypt in l97l, was declared an interest-free commercial bank, although its charter did not refer to Islam or Shariah (Islamic law). Islamic banks appeared on the earth scene as dynamic players over the past two decades. Nevertheless, a lot of the values that based on Islamic banking usually accepted all over the world, for centuries more willingly than decades. The essential principle of Islamic banking is the ban of Riba (interest), while the essential occupant of Islamic banking the prohibition of riba, a word that encompasses not only the perception of usury, but also that of interest has rarely been recognized as appropriate beyond the Islamic world, a lot of its guiding values have. The majority of these values are rooted in simple ethics and general sense, which form the bases of numerous religions, including Islam. Interest or â€Å"Usury† was forbidden in both the Old and New Testaments of the Bible, whereas Shakespeare and many other writers, mainly those writing in the 19th century, have attacked the barbarity of the carry out. Much of the ethics championed by Victorian writers such as Dickens ranging from the fair division of wealth through to mans elementary right to work is obviously present in contemporary Islamic society. Although the western media oftenrecommend that Islamic banking in its current form is a recent occurrence, in fact, the essential practices and principles date back to the early part of the seventh century. (Islamic Finance: A Euromoney Publication, 1997) It is obvious that Islamic finance was accomplished predominantly in the Muslim world during the Middle Ages, encouragement trade and business behavior. In Spain and the Mediterranean and Baltic States, Islamic trades became vital middlemen for trading actions. It is claimed that several concepts, techniques, and tools of Islamic finance were later adopted by European financiers and businessmen. As Islamic finance is intertwined within its religion, the basis of the religion affects the finance in two important ways: Islam aims at building a socio-economic order based on justice and considers economic activity as a means to an end and not an end in itself. It enjoins Muslims to harness natural resources, which are a trust from Allah SWT, for carrying out rightful activities; but abhors exploitation and man-made inequalities of income and wealth (Al-Harran, 1993). Islam is extremely concerned with the problem of financial growth, but treats this as an significant part of a wider problem, that of total human progress. The crucial function of Islam is to lead human growth on right lines and in the right direction. Islamic principle deals with all sides of economic development in the framework of total human development (Al-Harran, 1993). The reinforcement of Islamic banking coincided with the world-wide festivity of the advent of the 15th Century of Islamic calendar (Hijra) in 1976. At the same time financial assets of Muslims mostly those of the oil producing countries, expected a boost due to validation of the oil prices, which had up till now been under the power of foreign oil Corporations. These proceedings led Muslims to struggle to model their lives in agreement with the principles and philosophy of Islam (Abbas Valadkhani, 2004). Islam not only prohibits trade in interest but also in liquor, pork, gambling, pornography and anything else, which the Shariah (Islamic Law) deems Haram (unlawful). Islamic banking is an tool for the progress of an Islamic financial order. Some of the salient features of this order may be summed up as: Islam urges individuals to seek their economic well-being. Islam presents a clear difference between what is Halal (lawful) and what is haram (forbidden) in pursuit of such economic activity. In broad terms, Islam forbids all forms of economic activity, which are morally or socially injurious. This God rule can be considered as a way to systemize the citizens. Islam makes it obligatory on people to spend their wealth judiciously and not to hoard it, keep it idle or to squander it while acknowledging them their right to ownership of wealth legitimately acquired. This can be compared with the communism principles that look for the welfare of the whole members of the society. While allowing an individual to retain any extra capital, Islam look for reducing the edge of the extra for the well-being of the society as a whole, especially the poor and underprivileged sections of society by contribution in the procedure of Zakat. It is the way the Islamic government intervenes to ensure that poor people can have a formal financial source. While making payment for the ways of human nature and yet not yielding to the penalty of its worst propensities, Islam seeks to stop the amassing of wealth in a few hands to the damage of society as a whole, by its laws of inheritance. Viewed as a total, the financial system, which visualized by Islam aims at social justice without inhibiting people project beyond the point where it becomes not only jointly harmful but also individually self-destructive. The Islamic economic system employs the perception of contribution in the enterprise, utilizing the funds at threat on a profit-and- loss-distribution basis. This by no means implies that investments with economic institutions are necessarily tentative. This can be barred by careful investment strategy, diversification of risk and sensible management by Islamic economic institutions. This system supports people to invest their money in those financial institutions to exploit their utilities by making profits under the guidelines of the Shariah. The concept of profit-and-loss sharing, as a basis of financial transactions is a progressive one as it distinguishes good performance from the bad and minimize the players in the market to be the people who know how to invest and when they inter the market to catch the goal. The main goals of an Islamic Banking and Financial system are to: Implement the value system of the Quran and the Sunnah (tradition or practice of Prophet MuhammadSAW) in the realm of the Muslim socio-economic system. Ibn Taymiyahr.a. (n.d.), a distinguished scholar of Islam, explicates this as follows: â€Å"In muamalat (business transactions) all activities are permissible unless forbidden by revelation (Quran) or the practice of Prophet Muhammad SAW†. The examples of prohibited business activities would include dealing in gambling, liquor, pork etc. The financial contracts of Islamic banks need to be clearly documented, equitable and avoid the elements of Riba, Gharar and Maysir as explained in the following section. Foster the growth of the economy of Muslim nations by developing financial markets, institutions and instruments. A well-developed capital market, with efficient institutions offering diverse financial facilities, can reduce the overall cost of capital. It can enhance social welfare by facilitating the acceptance of projects whose; present value of all relevant cash in-flows (benefits) after tax is greater than the present value of all cash out-flows (cost) of the project; or the expected internal rate of return is greater than a minimum threshold rate (or cost of capital). Furthermore, these necessary conditions should also be satisfied for each party financing the project to alleviate agency effects. This entails economic development, which is promoted in Islam, as Prophet Muhammad SAW exhorted Muslims to undertake business ventures (tijarah) as described in the following hadith Nuaym ibn Abd Al-Rahman has quoted the (narration). ProphetSAW as saying: â€Å"Nine tenths of earnings (Rizq) is in bai (business ventures), and tenth in cattle†. This was reported by Ibrahim Al-Harbi (Al-Iraqi, 1992) and by Said ibn Mansur (Al-Suyuti, 1990). Dampen the shocks of extreme economic output by promoting risk-sharing instruments whose payoffs are strictly contingent on the profitability of a firm or project at a micro level. Financial facilities with fixed costs can severely strain the resources of borrowers during a slowdown, which lead to bankruptcies and structural impairment of the economy. The gist of Islamic financial securitization is summarized by the following well-known hadith quoted by Kahf and Khan (1992), â€Å"Al-kharaj bi al daman.† This implies that entitlement of return from assets vests in the one bearing the risk of it. 2.1 CONVENTIONAL BANKING The main job for most of non-Muslim or conventional banks is preserved money and valuables and give loans, credit, and imbursement services, for example checking accounts, money orders, and cashiers checks. These banks furthermore may propose investment and insurance products, which they were once banned from selling. As a diversity of models for collaboration and integration amongst finance industries have appeared, some of the conventional distinctions among banks, insurance companies, and securities firms have reduced. Regardless of these changes, banks continue to preserve and carry out their main role—allowing deposits and lending funds from these deposits. There are several kinds of banks, which vary in the number of services they offer and the customers they serve. Although some of the distinctions among these kinds of banks have tapering as they begin to enlarge the vary of products and services they propose, there are still key distinctive behaviors. Commercial banks, which control this industry, provide a full variety of services for customers, enterprise, and governments. These banks come in a broad range of sizes, from large international banks to local and community banks. International banks are involved in global lending and foreign cash trading, additionally to the more typical banking services. However, a lot of commercial banks have also extended to present online banking, and some previously Internet-only banks are opting to release branches. Savings banks and savings and loan associations, occasionally called thrift institutions, are the second biggest group of depository institutions. They were first recognized as community-based firms to finance mortgages for people to purchase homes and still cater mostly to the savings and lending requirements of individuals. Credit unions are another type of depository institution. Most credit unions are created by people with a familiar bond, for instance those who work for the similar company or be a member of the same labor union or church. Members pond their savings and, when they require money, they may borrow from the credit union, frequently at a minor interest rate than that demanded by other financial institutions. Federal preserve banks are Government agencies that achieve numerous financial services for the Government. Their chief tasks are to control the banking industry and to aid implement our Nations financial policy so our economy can run more proficiently by directing the Nations money provide—the total amount of money in the country, including cash and bank deposits. Interest on loans is the main source of income for most banks, making their diverse lending departments critical to their achievement. The commercial lending department loans money to companies to start or enlarge a business or to buy inventory and capital tools. The customer lending department handles student loans, credit cards, and loans for home developments, debt consolidation, and automobile purchases. Finally, the mortgage lending department loans money to individuals and businesses to buy real estate. The money to loan comes mainly from deposits in checking and reserving accounts, certificates of deposit, money market accounts, and other deposit accounts that clients and businesses arrangement with the bank. These deposits often make interest for the owner, and accounts that offer checking supply an easy technique for creation payments safely without using cash. Technology is having a main impact on the banking industry. such as, many usual bank services that once needed a teller, for example making a withdrawal or deposit, are now existing through ATMs that let people to right of entry their accounts 24 hours a day. In addition, direct deposit permits companies and governments to electronically transfer payments into different accounts. Also, debit cards, which may also apply as ATM cards, immediately deduct money from an account when the card is swiped across a machine at a stores cash register. Electronic banking by phone or computer permits consumers to pay invoices and shift money from one account to another. Through these channels, bank customers can too admission information such as account balances and statement history. Some banks have started offering online account aggregation, which makes accessible in one place detailed and up-to date information on a clients accounts held at diverse institutions. Progressions in technology have also led to upgrading in the ways in which banks process information. Use of check imaging, which lets banks to store photographed checks on the computer, is one such example that has been applied by some banks. Other kinds of technology have deeply impacted the lending side of banking. such as, the availability and increasing use of credit scoring software lets loans to be accepted in minutes, rather than days, making lending departments more competent. Other basic changes are taking place in the industry as banks vary their services to become more competitive. A lot of banks at the present offer their clients financial planning and asset management services, as well as brokerage and insurance services, frequently throughout a subsidiary or third party. Others are starting to offer investment banking services that assist companies and governments increase money during the issuance of stocks and bonds, also usually during a subsidiary. As banks reply to deregulation and as competition in this sector raises, the nature of the banking industry will continue to undertake considerable change. 2.2 COMPETITIVENESS OF THE ISLAMIC BANKING INDUSTRY The crucial feature of Islamic banking is that it is interest-free. Although it is frequently claimed that there is more to Islamic banking, for example contributions towards a more fair distribution of income and wealth, and improved equity contribution in the economy (Chapra l982), it nevertheless obtains its specific rationale from the fact that there is no place for the institution of interest in the Islamic order. Islam forbids Muslims from taking or giving interest (riba) in spite of of the reason for which such loans are made and despite of the rates at which interest is exciting. To be certain, there have been efforts to differentiate between usury and interest and between loans for consumption and for production. It has also been argued that riba refers to usury accomplished by minor money-lenders and not to interest charged by contemporary banks and that no riba is occupied when interest is compulsory on productive loans, but these arguments have not won approval. Apart from a few disagreeing opinions, he general agreement among Muslim scholars obviously is that there is no variation between riba and interest. In what follows, these two terms are used interchangeably. The forbidden of riba is mentioned in four different revelations in the Quran. The first revelation highlights that interest removes wealth of Gods blessings. The second revelation condemns it, placing interest in combination with illegal appropriation of property belonging to others. The third revelation enjoins Muslims to keep on clear of interest for the sake of their own welfare. The fourth revelation set up a clear difference between interest and trade, influencing Muslims to take only the principal sum and to forgo even this sum if the borrower is not capable to repay. It is further declared in the Quran that those who ignored the forbidden of interest are at war with God and His Prophet. The forbidden of interest is furthermore cited in no unsure terms in the Hadith (sayings of the Prophet). The Prophet warned not only those who take interest but also those who offer interest and those who record or witness the operation, saying that they are all similar in guilt. It may be mentioned in passing that similar prohibition are to be found in the pre-Quranic scriptures, although the People of the Book, as the Quran refers to them, had chosen to rationalize them. It is remarkable that Islam has successfully warded off various subsequent rationalization efforts aimed at legitimizing the institution of interest. Some scholars relays on economic reasons to explain the reasons on why interest is prohibited in Islam. scholars argued that interest is a pre- determined cost of production, which avoid full employment (Khan l968; Ahmad n.d.; Mannan l970). In the same tone, it has been challenged that international monetary crises are largely due to the institution of interest (Khan, n.d), and that trade cycles are in no small measure attributable to the phenomenon of interest (Ahmad l952; Suud n.d.). None of these studies, however, has really succeeded in creating a causal link between interest, on the one hand, and employment and trade cycles, on the other. Others, anxious to maintain the Islamic position on interest, have argued that interest is not very effective as a monetary policy instrument even in capitalist economies and have questioned the efficiency of the rate of interest as a determinant of saving and investment (Ariff l982). A general line running through all these negotiations is the exploitative character of the institution of interest, although some have pointed out that profit (which is legalized in Islam) can also be exploitative. One response to this is that one must differentiate between profit and profiteering, and Islam has prohibited the latter as well. It began as a theological dream, but Islamic banking has become a practical reality across the Middle East. The question now is, how far will Sharia boards and western regulators let it spread? (Josh Martin, Middle East, Jun2005 Issue 357, p50, 6p) The Islamic prohibition on interest does not imply that capital is costless in an Islamic system. Islam realizes that money is a factor of production however; it does not permit the factor to pre-determined claim on the productive surplus in the form of interest. This has leaded to the question as to what will then substitute the interest rate mechanism in an Islamic framework. There have been propositions that profit sharing can be a viable alternative (Ka Customer Awareness Toward Islamic Accounting Theory Customer Awareness Toward Islamic Accounting Theory CHAPTER 1: INTRODUCTION 1.1 BACKGROUND OF THE STUDY Islamic banks considered as an active player in the world economies over two decades ago (Ahmed S., 2009). The principles accounting upon which Islamic banking is based have been universally accepted for centuries rather than decades. The fundamental principle of Islamic financial institutions is the prohibition of Riba (interest). It is manifest that Islamic accounting theory were practiced mainly in the Islamic country throughout the middle ages, development trade and business activities. In order to understand what services that Islamic banks offer, it is essential to maintain an acceptable level of information of the basis behind it. It has been argued that the Islamic banks have not introduced any new services since their first existence in the 1970s, in fact they have tried to comply with the rules of the Islamic religion specified for these types of actions. High requests to assess Muslim customers perception and attitude toward Islamic bank services. Islamic banks understand that its paramount important to measure the degree of its customers awareness as well as to improve services. The financial institution follows the rules that Holy Quran and hadith have set to guide the Muslims in their financial matters. The Islamic financial system employs the idea of participation in the project, utilizing the funds at threat on a profit-and- loss-distribution basis (Ahmed, S., 2009). 1.2 STATEMENT OF THE PROBLEM During the last three decades, Islamic finance institutions have been rising significantly, both nationally and internationally (Ahmed, S., 2009; Iqbal Abbas, 2007). These firms were recognized in the emerging market of the Middle East to meet the order of investors and borrowers who are motivated by income maximization derived from the Islamic law (Sharia). Islamic finance institutions offer an extensive range of Islamic financial innovations from the simple agreement of profit-sharing agreement (Mudaraba) that is parallel to time deposit in conservative banks, to issue Islamic bonds (Sukuk) and derivatives. In gulf countries, the state of Kuwait banking industry considered on of the leaders in Islamic financial market. The growth of Islamic finance institutions in Kuwait has attracted some of the conventional financial firms (e.g., NBK IFIH, and Citibank) to add the service of Islamic windows to their clients. In spite of the advantages that are fixed in Islamic finance system and management, Islamic finance institutions encounter numerous primary challenges to the prospect of being recognized internationally. The challenges exist in local as well as global markets. On of these challenges is to assess the degree of awareness in Islamic accounting theories. In their study, Gerrard and Cunningham (1997) reported that Muslim respondents, though aware of basic conditions in Islam, were almost wholly ignorant of the sense of specific Islamic financial conditions like Mudaraba, Musharaka and Ijara. As result, many Islamic financial providers seek to assess the level of social awareness of their tools that incorporate with Sharia. The understanding of customer degree of awareness are paramount important to determine firms endowment to promote Islamic accounting theories. Bankers also seek to explore the reasons behind dealing with Islamic banks to better understand and improve services provided. Another challenge that faces Islamic financial institutions is that, as service provided they have to understand customers perceptions and attitude toward the services provided to better understand customers need, want, and improve their services. With no understanding to customer perceptions and attitude Islamic banks may have no means to better develop their services and improve customer satisfaction and compete in the local as well as the international market. The current study seeks to assess the level of customers awareness of Islamic accounting theories and to explore their perceptions and attitude toward these tools that incorporate with Sharia. 1.3 OBJECTIVES OF THE STUDY Islamic financing is an important area of contemporary academic and policy interest. Opposing views in the area are analyzed in the light of empirical evidence. Measuring the degree of customer awareness toward Islamic accounting theory and their perception and attitude toward Islamic tools will shape the future of Islamic financing. The current study attempts to reveals the degree of customers awareness toward Islamic and efforts bestows to improve their awareness in order to assist Islamic financial institution to determine the efforts needed to raise this awareness and improve their attitude and perceptions. Another objective of this study is to explore customers perceptive and perception toward Islamic transactions thus Islamic financial institutions can better understand their customers and improve services provided. 1.4 SIGNIFICANCE OF THE STUDY Islamic banks provide many financial services and are competing heavily in the Middle East with conventional banks. Customers nowadays go for Islamic bank loans for buying home, cars and even business setup, as the conditions are very clear and there are no rising interest piling up. To overcome the fierce competition, Islamic bank need to bestow efforts in rising the degree of awareness toward Islamic accounting and finical tools and improve customers perception and attitude. The study is of general theoretical importance as well as of particular practical significance for policy makers who intend to conform their existing financial systems to Islamic rules. Furthermore, at the practical level, the study aims to assist Islamic bank manager in providing empirically evidence how of Kuwaiti customers aware toward Islamic accounting theory and Islamic financial services. The study also provide framework for bank managers in measuring customers perception and attitude toward Islamic services and their usage of various products and services offered. At the theoretical level, the current study aims to develop the literature of Islamic accounting theory and explain how these theories are to be implemented in the Islamic financial institution who adapts Sharia. 1.5 THE SETTING OF THE STUDY In the Gulf Co-operation Council there are growing number of Islamic banks are also taking steps towards greater clearness and stronger authority structures. The state of Kuwait for example, has been taking a number of steps to reinforce its local Sharia-obedient institutions, including slowly moving in the direction of a latest regulatory framework for sukuk. In conversations with OBG, manufacturing insiders explained that due to a lack of suitable legal mechanisms, Islamic finance companies are not allowed to issue sukuk in Kuwait, which forces Kuwaiti companies to work through other markets, such as Bahrain. Given the massive increase in sukuk issuance worldwide, pegged at nearly $17 billion (in the Gulf alone, the growth rate since 2001 has been nearly 45%), Kuwaits financiers are keenly aware of the need for proper rules regulating sukuk. Sheikh Salem Abdulaziz Al Sabah, the governor of the Central Bank of Kuwait (CBK), said earlier of 2008 that regulations are wanted, saying that the CBK is keen to provide a legal system to regulate Islamic investment tools such as the issuance of sukuk, especially in light of growing demand. We are optimistic a solution will soon be found. In state of Kuwait, the Islamic financial sector and its sharia-compliant companies are the increasingly global. Kuwait Finance house Bank (KFH), as an example, in addition to its Turkey, Malaysia and Bahrain ventures, newly established a subsidiary with a pair of Chinese firms to discover real estate investments in the Chongqing region of a middle China. In a more high-profile move, Investment Dar, one of Kuwaits biggest Islamic investment companies, recently funded a takeover of British luxury carmaker Aston Martin to the tune of $925 million. To achieve the purpose of the current study, the study focuses on a specific Islamic bank that located in the state of Kuwait. KFH has usually been one of the main engines behind the growth of Kuwaits sharia-acquiescent financial market; however, its enlargement and development indicates a growing maturity in Kuwaits sharia-compliant services zone, established by the push toward the regulation of Islamic bonds (sukuk) and the emergence of ever-stronger Islamic investment firms. KFH was the first Islamic bank in Kuwait and one of the pioneers toward adapting of Islamic accounting and financial theory in the gulf region. Beside the convenience, the research believe that exploring the degree of Islamic accounting theories of this bank may reveals highly reliable evidence of generalizing the finding in the state of Kuwait. KFH considered the main Islamic bank in Kuwait and the second-main bank of any kind in the country. Also to the huge injection of capital, KFH lately unveiled plans to set up its own subsidiary in Amman. The expansion of Islamic banks operations at home and overseas underlines the growing development of Kuwaits Islamic financial sector. Thus the study believe that investigating the customers awareness of Islamic banks toward Islamic accounting theory are justified and understanding their perception and attitude toward KFH is paramount important in attempting to improve service quality of Islamic firms. 1.6 LIMITATIONS OF THE STUDY This study is concerns with Islamic banking that located in the state of Kuwait as its difficult to include all Islamic banks related to resource limitation and time restriction. The study also does not analyze all Islamic accounting theory as it is very vast subject to control, rather than focusing on basic Islamic accounting theory that adopted by Islamic financial institutions and banks. Other limitation could be found related to: Sample size: The sample size for the bank customer is very large. Therefore, the collection of customer feedback will be costly in term of time and money. The study aims to attain around (150) survey for the purpose of analysis, which may considered one of the study limitation. Data collection: It may be difficult to distribute and collect all data and forms since the study is targeting to collect feedback from the entire bank customers. 1.7 DEFINITION OF TERMS The current study includes many Islamic terms and concepts that will be stated as in Arabic meaning, some of these concepts are: Halal: The actions or items that Muslims can have access to. Haram: The actions or items that Muslims are banned from Riba: What is known in the west as the interest. Maysir: It means Games of chance such as lottery, gambling and it is usually referred to as Haram. Takaful: It is a form of insurance in the Islamic religion which will be explained in the essay. Gharar: Deception, hazard, speculation, uncertainty, risk (literally, peril or hazard) Mudaraba: Is a trustee financing contract, where one party, the financier, entrusts funds to the other party, the entrepreneur, for undertaking an activity Mushakara: It is an equity participation contract, whereby two or more partners contribute with funds to carry out an investment Muqarada: Loan Participation Qard Hassan: It is a benevolent loan (interest free) Sharia: It is Islamic religious law derived from the Holy Quran and the Sunnah 1.8 THESIS STRUCTURE The current study includes five chapters: chapter one described the background of this study, and consisted of the introduction, objectives and significance of the research. Chapter two reviewed the literatures on Islamic banking and theories. Chapter three explained the research methodology. The data analysis techniques and research findings were demonstrated and discussions in chapter four. Finally, chapter five exhibited conclusions and future recommendation. CHAPTER TWO LITERATURE REVIEW Its necessary to explore the literature of Islamic accounting theory in details in this chapter. This chapter attempts to review previous literatures on the topic of Islamic Accounting Theory and provides recent finding related to the degree of awareness of customers toward Islamic financial services. This chapter attempts provide recent study and articles about Islamic accounting theory that explain the nature of Islamic banks system. Previous literatures and studies have revealed that the first recent research in Islamic banking filed was conducted in Egypt under cover, without projecting an Islamic picture, for fear of being seen as a demonstration of Islamic fundamentalism, which was abhorrence to the political government (Siddiqi l988). These studies remain until l967 where nine Islamic banks open in the country (Ready l98l). These banks was neither charging nor paying interest, investing mainly by participating in trade and industry, directly or in partnership with others, and shared the profits with their depositors (Siddiqi l988). For that reason, Islamic banks functioned basically as saving-investment firms rather than as commercial banks that based on charging interests. The Nasir Social Bank, established in Egypt in l97l, was declared an interest-free commercial bank, although its charter did not refer to Islam or Shariah (Islamic law). Islamic banks appeared on the earth scene as dynamic players over the past two decades. Nevertheless, a lot of the values that based on Islamic banking usually accepted all over the world, for centuries more willingly than decades. The essential principle of Islamic banking is the ban of Riba (interest), while the essential occupant of Islamic banking the prohibition of riba, a word that encompasses not only the perception of usury, but also that of interest has rarely been recognized as appropriate beyond the Islamic world, a lot of its guiding values have. The majority of these values are rooted in simple ethics and general sense, which form the bases of numerous religions, including Islam. Interest or â€Å"Usury† was forbidden in both the Old and New Testaments of the Bible, whereas Shakespeare and many other writers, mainly those writing in the 19th century, have attacked the barbarity of the carry out. Much of the ethics championed by Victorian writers such as Dickens ranging from the fair division of wealth through to mans elementary right to work is obviously present in contemporary Islamic society. Although the western media oftenrecommend that Islamic banking in its current form is a recent occurrence, in fact, the essential practices and principles date back to the early part of the seventh century. (Islamic Finance: A Euromoney Publication, 1997) It is obvious that Islamic finance was accomplished predominantly in the Muslim world during the Middle Ages, encouragement trade and business behavior. In Spain and the Mediterranean and Baltic States, Islamic trades became vital middlemen for trading actions. It is claimed that several concepts, techniques, and tools of Islamic finance were later adopted by European financiers and businessmen. As Islamic finance is intertwined within its religion, the basis of the religion affects the finance in two important ways: Islam aims at building a socio-economic order based on justice and considers economic activity as a means to an end and not an end in itself. It enjoins Muslims to harness natural resources, which are a trust from Allah SWT, for carrying out rightful activities; but abhors exploitation and man-made inequalities of income and wealth (Al-Harran, 1993). Islam is extremely concerned with the problem of financial growth, but treats this as an significant part of a wider problem, that of total human progress. The crucial function of Islam is to lead human growth on right lines and in the right direction. Islamic principle deals with all sides of economic development in the framework of total human development (Al-Harran, 1993). The reinforcement of Islamic banking coincided with the world-wide festivity of the advent of the 15th Century of Islamic calendar (Hijra) in 1976. At the same time financial assets of Muslims mostly those of the oil producing countries, expected a boost due to validation of the oil prices, which had up till now been under the power of foreign oil Corporations. These proceedings led Muslims to struggle to model their lives in agreement with the principles and philosophy of Islam (Abbas Valadkhani, 2004). Islam not only prohibits trade in interest but also in liquor, pork, gambling, pornography and anything else, which the Shariah (Islamic Law) deems Haram (unlawful). Islamic banking is an tool for the progress of an Islamic financial order. Some of the salient features of this order may be summed up as: Islam urges individuals to seek their economic well-being. Islam presents a clear difference between what is Halal (lawful) and what is haram (forbidden) in pursuit of such economic activity. In broad terms, Islam forbids all forms of economic activity, which are morally or socially injurious. This God rule can be considered as a way to systemize the citizens. Islam makes it obligatory on people to spend their wealth judiciously and not to hoard it, keep it idle or to squander it while acknowledging them their right to ownership of wealth legitimately acquired. This can be compared with the communism principles that look for the welfare of the whole members of the society. While allowing an individual to retain any extra capital, Islam look for reducing the edge of the extra for the well-being of the society as a whole, especially the poor and underprivileged sections of society by contribution in the procedure of Zakat. It is the way the Islamic government intervenes to ensure that poor people can have a formal financial source. While making payment for the ways of human nature and yet not yielding to the penalty of its worst propensities, Islam seeks to stop the amassing of wealth in a few hands to the damage of society as a whole, by its laws of inheritance. Viewed as a total, the financial system, which visualized by Islam aims at social justice without inhibiting people project beyond the point where it becomes not only jointly harmful but also individually self-destructive. The Islamic economic system employs the perception of contribution in the enterprise, utilizing the funds at threat on a profit-and- loss-distribution basis. This by no means implies that investments with economic institutions are necessarily tentative. This can be barred by careful investment strategy, diversification of risk and sensible management by Islamic economic institutions. This system supports people to invest their money in those financial institutions to exploit their utilities by making profits under the guidelines of the Shariah. The concept of profit-and-loss sharing, as a basis of financial transactions is a progressive one as it distinguishes good performance from the bad and minimize the players in the market to be the people who know how to invest and when they inter the market to catch the goal. The main goals of an Islamic Banking and Financial system are to: Implement the value system of the Quran and the Sunnah (tradition or practice of Prophet MuhammadSAW) in the realm of the Muslim socio-economic system. Ibn Taymiyahr.a. (n.d.), a distinguished scholar of Islam, explicates this as follows: â€Å"In muamalat (business transactions) all activities are permissible unless forbidden by revelation (Quran) or the practice of Prophet Muhammad SAW†. The examples of prohibited business activities would include dealing in gambling, liquor, pork etc. The financial contracts of Islamic banks need to be clearly documented, equitable and avoid the elements of Riba, Gharar and Maysir as explained in the following section. Foster the growth of the economy of Muslim nations by developing financial markets, institutions and instruments. A well-developed capital market, with efficient institutions offering diverse financial facilities, can reduce the overall cost of capital. It can enhance social welfare by facilitating the acceptance of projects whose; present value of all relevant cash in-flows (benefits) after tax is greater than the present value of all cash out-flows (cost) of the project; or the expected internal rate of return is greater than a minimum threshold rate (or cost of capital). Furthermore, these necessary conditions should also be satisfied for each party financing the project to alleviate agency effects. This entails economic development, which is promoted in Islam, as Prophet Muhammad SAW exhorted Muslims to undertake business ventures (tijarah) as described in the following hadith Nuaym ibn Abd Al-Rahman has quoted the (narration). ProphetSAW as saying: â€Å"Nine tenths of earnings (Rizq) is in bai (business ventures), and tenth in cattle†. This was reported by Ibrahim Al-Harbi (Al-Iraqi, 1992) and by Said ibn Mansur (Al-Suyuti, 1990). Dampen the shocks of extreme economic output by promoting risk-sharing instruments whose payoffs are strictly contingent on the profitability of a firm or project at a micro level. Financial facilities with fixed costs can severely strain the resources of borrowers during a slowdown, which lead to bankruptcies and structural impairment of the economy. The gist of Islamic financial securitization is summarized by the following well-known hadith quoted by Kahf and Khan (1992), â€Å"Al-kharaj bi al daman.† This implies that entitlement of return from assets vests in the one bearing the risk of it. 2.1 CONVENTIONAL BANKING The main job for most of non-Muslim or conventional banks is preserved money and valuables and give loans, credit, and imbursement services, for example checking accounts, money orders, and cashiers checks. These banks furthermore may propose investment and insurance products, which they were once banned from selling. As a diversity of models for collaboration and integration amongst finance industries have appeared, some of the conventional distinctions among banks, insurance companies, and securities firms have reduced. Regardless of these changes, banks continue to preserve and carry out their main role—allowing deposits and lending funds from these deposits. There are several kinds of banks, which vary in the number of services they offer and the customers they serve. Although some of the distinctions among these kinds of banks have tapering as they begin to enlarge the vary of products and services they propose, there are still key distinctive behaviors. Commercial banks, which control this industry, provide a full variety of services for customers, enterprise, and governments. These banks come in a broad range of sizes, from large international banks to local and community banks. International banks are involved in global lending and foreign cash trading, additionally to the more typical banking services. However, a lot of commercial banks have also extended to present online banking, and some previously Internet-only banks are opting to release branches. Savings banks and savings and loan associations, occasionally called thrift institutions, are the second biggest group of depository institutions. They were first recognized as community-based firms to finance mortgages for people to purchase homes and still cater mostly to the savings and lending requirements of individuals. Credit unions are another type of depository institution. Most credit unions are created by people with a familiar bond, for instance those who work for the similar company or be a member of the same labor union or church. Members pond their savings and, when they require money, they may borrow from the credit union, frequently at a minor interest rate than that demanded by other financial institutions. Federal preserve banks are Government agencies that achieve numerous financial services for the Government. Their chief tasks are to control the banking industry and to aid implement our Nations financial policy so our economy can run more proficiently by directing the Nations money provide—the total amount of money in the country, including cash and bank deposits. Interest on loans is the main source of income for most banks, making their diverse lending departments critical to their achievement. The commercial lending department loans money to companies to start or enlarge a business or to buy inventory and capital tools. The customer lending department handles student loans, credit cards, and loans for home developments, debt consolidation, and automobile purchases. Finally, the mortgage lending department loans money to individuals and businesses to buy real estate. The money to loan comes mainly from deposits in checking and reserving accounts, certificates of deposit, money market accounts, and other deposit accounts that clients and businesses arrangement with the bank. These deposits often make interest for the owner, and accounts that offer checking supply an easy technique for creation payments safely without using cash. Technology is having a main impact on the banking industry. such as, many usual bank services that once needed a teller, for example making a withdrawal or deposit, are now existing through ATMs that let people to right of entry their accounts 24 hours a day. In addition, direct deposit permits companies and governments to electronically transfer payments into different accounts. Also, debit cards, which may also apply as ATM cards, immediately deduct money from an account when the card is swiped across a machine at a stores cash register. Electronic banking by phone or computer permits consumers to pay invoices and shift money from one account to another. Through these channels, bank customers can too admission information such as account balances and statement history. Some banks have started offering online account aggregation, which makes accessible in one place detailed and up-to date information on a clients accounts held at diverse institutions. Progressions in technology have also led to upgrading in the ways in which banks process information. Use of check imaging, which lets banks to store photographed checks on the computer, is one such example that has been applied by some banks. Other kinds of technology have deeply impacted the lending side of banking. such as, the availability and increasing use of credit scoring software lets loans to be accepted in minutes, rather than days, making lending departments more competent. Other basic changes are taking place in the industry as banks vary their services to become more competitive. A lot of banks at the present offer their clients financial planning and asset management services, as well as brokerage and insurance services, frequently throughout a subsidiary or third party. Others are starting to offer investment banking services that assist companies and governments increase money during the issuance of stocks and bonds, also usually during a subsidiary. As banks reply to deregulation and as competition in this sector raises, the nature of the banking industry will continue to undertake considerable change. 2.2 COMPETITIVENESS OF THE ISLAMIC BANKING INDUSTRY The crucial feature of Islamic banking is that it is interest-free. Although it is frequently claimed that there is more to Islamic banking, for example contributions towards a more fair distribution of income and wealth, and improved equity contribution in the economy (Chapra l982), it nevertheless obtains its specific rationale from the fact that there is no place for the institution of interest in the Islamic order. Islam forbids Muslims from taking or giving interest (riba) in spite of of the reason for which such loans are made and despite of the rates at which interest is exciting. To be certain, there have been efforts to differentiate between usury and interest and between loans for consumption and for production. It has also been argued that riba refers to usury accomplished by minor money-lenders and not to interest charged by contemporary banks and that no riba is occupied when interest is compulsory on productive loans, but these arguments have not won approval. Apart from a few disagreeing opinions, he general agreement among Muslim scholars obviously is that there is no variation between riba and interest. In what follows, these two terms are used interchangeably. The forbidden of riba is mentioned in four different revelations in the Quran. The first revelation highlights that interest removes wealth of Gods blessings. The second revelation condemns it, placing interest in combination with illegal appropriation of property belonging to others. The third revelation enjoins Muslims to keep on clear of interest for the sake of their own welfare. The fourth revelation set up a clear difference between interest and trade, influencing Muslims to take only the principal sum and to forgo even this sum if the borrower is not capable to repay. It is further declared in the Quran that those who ignored the forbidden of interest are at war with God and His Prophet. The forbidden of interest is furthermore cited in no unsure terms in the Hadith (sayings of the Prophet). The Prophet warned not only those who take interest but also those who offer interest and those who record or witness the operation, saying that they are all similar in guilt. It may be mentioned in passing that similar prohibition are to be found in the pre-Quranic scriptures, although the People of the Book, as the Quran refers to them, had chosen to rationalize them. It is remarkable that Islam has successfully warded off various subsequent rationalization efforts aimed at legitimizing the institution of interest. Some scholars relays on economic reasons to explain the reasons on why interest is prohibited in Islam. scholars argued that interest is a pre- determined cost of production, which avoid full employment (Khan l968; Ahmad n.d.; Mannan l970). In the same tone, it has been challenged that international monetary crises are largely due to the institution of interest (Khan, n.d), and that trade cycles are in no small measure attributable to the phenomenon of interest (Ahmad l952; Suud n.d.). None of these studies, however, has really succeeded in creating a causal link between interest, on the one hand, and employment and trade cycles, on the other. Others, anxious to maintain the Islamic position on interest, have argued that interest is not very effective as a monetary policy instrument even in capitalist economies and have questioned the efficiency of the rate of interest as a determinant of saving and investment (Ariff l982). A general line running through all these negotiations is the exploitative character of the institution of interest, although some have pointed out that profit (which is legalized in Islam) can also be exploitative. One response to this is that one must differentiate between profit and profiteering, and Islam has prohibited the latter as well. It began as a theological dream, but Islamic banking has become a practical reality across the Middle East. The question now is, how far will Sharia boards and western regulators let it spread? (Josh Martin, Middle East, Jun2005 Issue 357, p50, 6p) The Islamic prohibition on interest does not imply that capital is costless in an Islamic system. Islam realizes that money is a factor of production however; it does not permit the factor to pre-determined claim on the productive surplus in the form of interest. This has leaded to the question as to what will then substitute the interest rate mechanism in an Islamic framework. There have been propositions that profit sharing can be a viable alternative (Ka