Islamic finance : the structure-objective mismatch and its consequences
Source
ISRA International Journal of Islamic Finance
Issue
Vol. 2, Issue 1 (30 Jun. 2010), pp.35-60, 26 p.
Publisher
International Shari'ah Research Academy for Islamic Finance
Publication Date
2010-06-30
Country of Publication
Malaysia
No. of Pages
26
Main Subjects
Economy and Commerce
Financial and Accounting Sciences
Religion
Islamic Studies
Topics
- Islamic jurisprudence
- Financial crises
- Islamic economics
- Islam
- Financial transactions
- Financing
- Resale on profit
- Bank loans
- Banking services
- Commercial banks
- Islamic Banks
- Deeds
Abstract EN
This paper raises the issue of an initial structure-objective mismatch in the launching of Islamic finance.
The abolition of interest and promotion of growth with equity were goals of the conceived system.
These goals expressed a long term vision to improve the condition of the Muslim community across the world.
However, the organizational form adopted for Islamic finance was that of the existing commercial banks, which essentially provided short-term loans on interest to industry and commerce.
The choice thus involved an intrinsic mismatch between the structure and objectives of Islamic finance.
The mismatch did carry some advantages, but–from a more important angle–it exposed Islamic finance to commitments and influences which could not align very well with the goals the pioneers had in mind.
Note that the focus here is not a reversal of the mismatch but identifying its consequences, which have forced the nascent Islamic system to converge and compete with the mature conventional finance dominated by the West.
The ground realities are not being adapted to SharÊÑah norms; it is the norms that are being stretched to the limit to meet the demands of the conventional system.
Ordinary Muslims who hoped to benefit from Islamic financing remain unattended.
Thus, what Islamic finance can or cannot change will depend on where its ongoing integration with the conventional system leads it.
Currently, most merits claimed for the Islamic system defy evidence.
The basic reforms financial systems require in the face of current crisis are the control of credit, leverage lure and speculation.
Islamic finance is, in principle, better equipped to achieve these ends.
American Psychological Association (APA)
Hasan, Zubayr. 2010. Islamic finance : the structure-objective mismatch and its consequences. ISRA International Journal of Islamic Finance،Vol. 2, no. 1, pp.35-60.
https://search.emarefa.net/detail/BIM-717601
Modern Language Association (MLA)
Hasan, Zubayr. Islamic finance : the structure-objective mismatch and its consequences. ISRA International Journal of Islamic Finance Vol. 2, no. 1 (Jun. 2010), pp.35-60.
https://search.emarefa.net/detail/BIM-717601
American Medical Association (AMA)
Hasan, Zubayr. Islamic finance : the structure-objective mismatch and its consequences. ISRA International Journal of Islamic Finance. 2010. Vol. 2, no. 1, pp.35-60.
https://search.emarefa.net/detail/BIM-717601
Data Type
Journal Articles
Language
English
Notes
Includes bibliographical references : p. 58-60
Record ID
BIM-717601