This paper examines the basic principles and other salient features of Islamic economy such as the principles of multi-faceted ownership, economic freedom within a defined limit and social justice. Then their effects on Iranian Banking and objectives of financial statements have been considered.This paper compares the new banking model with an Islamic model in terms, objectives and theoretical concepts of banking. The theoretical concepts of western model are self-evident statements or axioms that represent the nature of entities operating in free economy characterized by private ownership of property. Whereas behind them there are hidden basic principles of economies which have net been written in Finance literature because they are assumed as axioms. The most important attribute in Islamic economy is social justice. One of the most important elements for establishing social justice is zakat. Another important element is Riba [Interest]. Riba is forbidden in Islam and people are not allowed to make money by lending their capital on interest. In the Islamic view, State has responsibility to create a suitable environment 10 implement Shan ah [Islamic Teaching] in society. An Islamic Finance model is based on Macroeconomics.
Basic Principles of Islamic Economy, an Islamic Finance Model, western model
