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Islamic Social Finance

Islamic Social Finance

The main institutions and instruments related to the socio-economic aspect of Islam include Zakat, Sadaqah, Qard Hasan, and Waqf. Islam encourages Muslims to make contributions to support and alleviate the conditions of those in need. In this regard, these significant aspects of the Islamic social financial system stand out for their ability to promote social solidarity and justice in society.

  • Zakat, for example, is a mandatory form of alms that contributes to the redistribution of wealth and assistance to those in poverty. This institution underscores the importance of caring for less privileged members of society and helps establish a more equitable economic system.
  • Sadaqah, or voluntary charity, allows people to perform acts of kindness and help those in need without obligations. This act of charity strengthens social solidarity.
  • Qard Hasan represents interest-free loans that can be provided to those in need of financial support. This instrument contributes to the creation of sustainable economic systems and the development of entrepreneurship.
  • Waqf plays a key role in providing education, healthcare, and social welfare. This institution has a rich history and is experiencing a revival in the modern world, thanks to humanitarian non-governmental organizations and Islamic development institutions that provide support for the socio-economic development of less developed countries. The Waqf institution contributes to strengthening social solidarity and creating sustainable socio-economic systems for those in need.


Islamic microfinance, conducted through Mudarabah and Musharakah contracts, is one of the instruments and modern trends in social investment. This segment of Islamic social finance is new and actively developing in several Islamic countries to support socially vulnerable people. Islamic microfinance aims to empower individual self-sufficiency and create positive social and economic effects for their families. This is achieved through the development of entrepreneurship and aims to increase the well-being of these individuals while reducing their dependence on government and other forms of aid.

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