INTERNATIONAL ISLAMIC UNIVERSITY CHITTAGONG

Department of Business Administration

Program: BBA
Course Code: ECON-2403, Course Title: Principles of Islamic Economics

Objective of the Course

The aim of the course is to provide a conceptual framework of Islamic Economics. The
course is designed to enable students to understand how Islam and Islamic worldview
permeate all aspects of life including economics. The basic premise of this course is
that the study of Islamic economics proceeds from the Islamic worldview and has to
be developed according to a methodology that is founded upon this worldview.
Since economics deals with various aspects such as production, consumption,
distribution, factors of production, pricing of factors, market strategies etc., all these
areas will be dealt within the course from Islamic perspective. Moreover, the Islamic
public finance i,e zakat and Islamic banking system will also be covered in the course
with due emphasis . Furthermore, a comparative analysis of different economic
systems will also be made in the course so as to enable the students to formulate
ideas regarding Islamic economics in its truest perspective.

COURSE OUTLINE

Mid –Term Examination

1. Introduction: Definitions, Principles of Islamic Economics, Nature and Scope of
Islamic Economics, Islamic Economic Worldview, Basis of Islamic economics, goals or
objectives of Islamic economics, assumptions of Islamic economics, main sources of
Islamic economic knowledge, importance of Islamic economics. Comparative
Economic System: Laissez–faire economy, market economy, command economy,
mixed economy, differences between Islamic economy and capitalist economy.
2. An Overview of Microeconomics in an Islamic Framework
i) Consumer Behavior in Islam: Some basic concepts: Need vs Demand, Islamic
concept of need, want-utility vs need-maslahah, Characteristics of consumer in an
Islamic economy, differences between capitalist and Islamic consumer's behavior,
Objectives of consumption in Islam, Theory of consumer behavior in Islamic
economics: Monzer Kahf Model and its differences with conventional theory of
consumer behaviour. Derivation of Final Spending Function, Shifts in the Final
Spending Function.
ii) Market Mechanism from Islamic Perspective: Islamic theory of effective need-
based demand and potential capacity- based supply, Market Mechanism:
Determination of Price and Quantity, Islamic Approach to Market Prices- Islamic
pricing policy- Three policy options: Desirable policy option in Islam.

Wahid Alam Chowdhury, BSS (Hons in Economics),MSS (Economics) & LL.B, CU.
Bank Manager & Senior Faculty- IIUC, Cell: 01836402323, mdwahidchy@gmail.com
iii) The Theory of Production in Islam: Objectives of Production, the goals of the
firm- Profit Maximization VS Sales Maximization, Factors of Production and Their
Pricing: Islamic Perspective. Characteristics of an Islamic Firm, Theory of Islamic
Firm: Metwally Model, Differences between firms in an Islamic society and in a non-
islamic society, understanding of the concept of profit and profit share in Islam.
Satisfying behaviour, Advertising in Islam.
Final Examination
iv) Market structure in Islam: Monopoly market and Islam– characteristics of a
monopolist in Islam, price-quantity relationship of a monopoly market in an Islamic
perspective, price discrimination and Islam, Covering Loss through price
discrimination, Oligopoly market and Islam – definition of oligopoly market and its
characteristics, kink demand curve in an oligopoly market and Islamic perspective.

3. An Overview of Macroeconomics in an Islamic Framework:

i) Consumption function in Islam: Concept of Consumption in Islam, Consumption
Function in Islam, Determinants of Islamic Consumption Function, Debates regarding
APC and MPC- Model of M. A. MANNAN, Expected Desirable income hypothesis and
Consumption, Aggregate Consumption Function.
ii) Riba or Interest and Profit Loss Sharing System: Definition of riba, different
concepts about riba, characteristics of riba, types of riba, Arguments for Riba or
Interest in Conventional Economy, Reasons behind Prohibition of Riba in an Islamic
Economy, Profit: How is it different from Riba? Saving and Investment Behaviour in
Islam: Saving and Investment Decisions, Profit-Loss Sharing System- Its superiority
over interest based system.
iii) Islamic banking system: Problems of Traditional Banking System, Concept of
Islamic banking, emergence of Islamic banking system, features of Islamic banking,
Functions of Islamic banks, objectives of Islamic banking, Contributions of Islamic
Banks towards Socio-economic development. differences between traditional banking
and Islamic banking, sources and uses of funds of Islamic bank, financing systems of
Islamic bank.
iv) Public finance in Islam – Zakat : Zakat and Islam – What is zakat and why is zakat?
Principles of Zakat. Differences between Zakat and capitalist tax system, Basis of
Zakat: Nisab and the rate of Zakat, Inflation and Zakat objectives of Zakat – moral,
religious and socio-economic objectives, Zakat recipients, the role of state in Zakat
collection and distribution.
v) Law of inheritance in Islam and its significance.

Wahid Alam Chowdhury, BSS (Hons in Economics),MSS (Economics) & LL.B, CU.
Bank Manager & Senior Faculty- IIUC, Cell: 01836402323, mdwahidchy@gmail.com
C.RECOMMENDED BOOKS:
Texts
M. A. Hamid Islamic Economics – An Introductory Analysis
Sayyid Tahir, Aidit Ghazali, Readings on Microeconomics: An Islamic
Syed Omar Syed Agil Perspective
References
Longman , Kuala Lumpur , Readings in microeconomics
Malaysia
M.A. Mannan Islamic Economics – Theory and Practice
Reference Journals
Thoughts on Islamic Economics Islamic economics research bureau
The journal of Islamic Economics International Islamic University , Malaysia

D. Marks Distribution :
Class test , assignment and attendance 20%
Mid Term Examination (duration 90 minutes) 30%
Final Examination (duration 2 hours and 30 minutes) 50%
Total 100%

Course Instructor:

Md. Wahid Alam Chowdhury

BSS (Hons in Economics), CU
MSS (Economics) & LL.B
Chittagong University
Bank Manager & Senior Faculty- IIUC
Cell: 01836402323

Wahid Alam Chowdhury, BSS (Hons in Economics),MSS (Economics) & LL.B, CU.
Bank Manager & Senior Faculty- IIUC, Cell: 01836402323, mdwahidchy@gmail.com