Evaluation of Islamic Finance Against the Odds of Credit Crunch in Nigeria

Abstract

Islamic finance had been termed as one of the oldest financial system with unique and ethical elements that are mostly handled by Islamic financial experts. Today, many people seek for Islamic financial knowledge to be able to understand some of the Islamic financial model whose principle is confined within the teachings of the Holy Qur’an, Sunnah and Hadith. This study seeks to focus on an evaluation of Islamic finance against the odds of credit crunch in Nigeria. Data were collected from Qur’an, Hadith, Journals, organized workshops and paper presentations etc. It was revealed that the emergence of Islamic finance system in Nigeria was considered as a welcome development particularly by the Islamic faith and on contrary it has led to serious critics and suspension by non- Muslim. Hence, there is need for Islamic financial expertise to run the system effectively. It has also been established that the Islamic financial mode of operation has been enhanced to strike balance on human and capital development. It was also discovered that Islamic finance is concerned about educational and monitoring business in contractual agreement since it’s on a basis of profit and loss sharing on agreed principles. Meanwhile, it was recommended that businesses and individuals should assess the product and services of Interest Free Finance so as to benefit from its creation of assets which will be available to customers of all faiths. Accordingly, the management of Islamic financial Institutions should enhance its monitoring of capital adequacy, risk management controls, Shari’ah compliance, adequate reporting, window operations Investment Account Holders and customer disclosure to ensure that institutions know their customers to prevent money laundering.