Specific traits of Islamic law in relation to economic and financial systems Martina KRÜGEROVÁa*, Václav ZÁVADA, Damian CZUDEK, Michal KOZIEŁ, Petra DVOŘÁKOVÁ, Jan KUBICA a Department of Law, Faculty of Economics, VŠB-Technical University of Ostrava, Sokolská 33, 701 21 Ostrava, Czech Republic. Abstract Islamic law is a legal system with a number of specific traits, which determine the path to the Islamic economic system. The Islamic banking system has been overlooked as an alternative to our financial system for years. The lack of interest to which it was exposed in the past clearly left a trace of misconceptions, with which we are accus- tomed to view it. It does not just concern the concept of our Western world banking in an Islamic environment. It is a system based on pillars, which are based on a very different historical context. The goal of the paper is to de- scribe and explain the principles of the Islamic laws and the actual behaviour of the economy, as well as the eco- nomic entities formally operating under Islamic principles (mainly banks). Based on an understanding of the prin- ciples of Islamic law and the principles on which Islamic banks work and on an explanation of the banks’ main characteristics, in particular the relationship with interest, loan usury and clarification of the method of profit gain, the paper aims to evaluate the effect of Islamic finance and outline the current practice in the light of compliance with the fundamentals of Islamic financial law. Keywords Islamic bank, Islamic economy, Islamic financial law, Islamic law. JEL Classification: P40, P43, K00, G21, G22 *
[email protected] (corresponding author) This article was funded by the Student Grant Competition at the Faculty of Economics, VSB-Technical University of Ostrava as part of the project SP2013/100 Regulation and economic aspects of Islamic banking system and its application in the Czech Republic.