By Dr. Hussein Shehatah
Expert on the Islamic Financial Transactions
After World financial meltdown had dealt a severe blow to the free market system, economists rushed searching for alternatives that could avoid the pitfalls of Capitalism. Dr. Hussein Shehata, a prominent expert on Islamic financial transactions, argues that Islamic economic system can be a viable alternative. Dr. Hussein Shehata Received his PhD in administrative accounting from Bradford University, the United Kingdom. He works as a financial advisor for numerous financial institutions in the Muslim World.
Signs of the collapse of the world financial system have emerged, causing great panic to people all over the world. Many governments called upon economists and experts to find a way out. Financial institutions and their agents began to think about rescue plans.
Many people rushed to draw their deposits from banks. At the same time, several financial institutions have frozen the process of granting loans to companies and individuals for fear that it might be difficult to take them back.
The drop in the circulation of money among individuals, companies and financial institutions has given rise to a sharp slowdown in the economic activity. As a consequence, debtors have become unable to pay back their debts.
Wall Street meltdown dealt a severe blow to the level of exchanges in money and exchange markets causing indexes to fluctuate. Furthermore, used capacities in companies were decreased due to the decrease in financial flow and the inability to take loans from financial institutions, except at high interest rates with heavy guarantees.
This shortage of financial flow decreased consumption of certain commodities, like cars and real estate sector. The drop in consumption decreases savings, investment projects, and hence increases unemployment which is eerily climb as many companies become bankrupt threatening many employees to lose their jobs.
