@article{Rahman_2015, title={Ethical Investment in Stock Screening and Zakat on Stocks}, volume={4}, url={https://journals.iium.edu.my/iiibf-journal/index.php/jif/article/view/69}, DOI={10.31436/jif.v4i1.69}, abstractNote={<span lang="EN-GB">Islamic finance is the fastest growing segment of the global financial system and has been experiencing an impressive double-digit growth in recent history. Following the growth trend of Islamic finance, a rapidly rising affluent and well-educated <em>Muslim</em> middle class from the Islamic world and Western countries is aspiring to match finance with faith and fueling demand for Islamic investments. This paper examines how <em>Muslim </em>investors can invest in the contemporary stock market in a way completely compatible with the letter and spirit of divine Islamic law or <em>shariah</em>, and how Islamic investment is considered for <em>zakat</em>—a religious obligation to donate to the poor and needy a certain percentage of wealth. The conditions laid down by <em>shariah </em>make <em>Muslim</em> investors’ participation in the stock market a special case of ethical investment. This paper discusses a qualitative screening process to identify stocks of companies that are engaged in business or activities permissible (<em>halal</em>) in <em>Islam</em>, and a quantitative screening process utilizing financial ratio analysis to allow companies in permissible business to use a tolerable level of interest-bearing securities and associated interest income and expenses. Stocks of companies passing these tests are designated as <em>shariah</em>-compliant stocks or <em>halal</em> investments and these stocks form the investment opportunity set for <em>Muslim </em>investors. The paper then focuses on how to cleanse investment income from <em>shariah</em>-compliant stocks contaminated by income from impermissible (<em>haram</em>) sources and concludes with a discussion of two opinions of Islamic jurists and <em>shariah </em>scholars on treatment of investment in stocks for <em>zakat</em> calculation.</span>}, number={1}, journal={Journal of Islamic Finance}, author={Rahman, Shafiqur}, year={2015}, month={May}, pages={39–62} }