ISLAMIC ECONOMICS, BANKING AND FINANCE: AN OVERVIEW

2016

Islamic economics has of late landed in confusion and neglect and much concern is being voiced on this state of affairs. The divergence of views on various aspects of the subject tends to grow, cohesive efforts are missing. It is in this context that the present paper takes a look at the nature and significance of Islamic economics and examines the issues of its definition, nature and scope, the questions of methods and methodology, system approach, the problems that seems to hinder its growth, the challenges Islamic economics faces today and how the same can be faced. Since the differences between the Islamic and mainstream economic disciplines stem from the divergent worldviews that condition them, the discussion opens on the topic as background material. This paper is a part of draft Chapter of a book under preparation on Islamic economics and finance. Comments and suggestions are welcome but the paper or its parts cannot be put to any commercial or unfair use.

Islamic Economics, epitomized largely by Islamic Banking and Finance, has received a serious global attention especially in the last two decades. From writings on the evils of the dominant capitalist economics which is characterized by interest, exploitation and economic injustice, and expounding the Economic principles of Islam; Islamic Economics has grown into a full-fledged discipline which has also led to the birth of a new crop of economic and financial institutions all over the world. There is a growing interest in Islamic Economics in the academic world as also in global economic and political circles. The objective of this paper is to analytically present an overview of Islamic Economics, highlighting some of the most important stages that finally led to its emergence and fruition as both an independent academic discipline and a key contributor to the development of the international economy.

World Economics, 2008

The relevance of religious belief to the material world is often overlooked, even by the devout, but any study of the major religions will show that there is a considerable body of teaching on how believers should conduct their working lives, undertake monetary transactions and manage their financial assets. Economic activity involves human behaviour, and this introduces a moral dimension, as humans have choices and their actions can be a force for good or bad. Seeking divine guidance for economic decision making can be helpful in making the right choices, and can ease consciences where decisions affect the lives of others. Economic governance, whether at national or corporate level, can be a lonely and thankless task, but if those exercising responsibility feel they are carrying out their duties on behalf of the Almighty, this can inspire and motivate themselves and others.

More than three decades ago a group of Muslim economists took the burden of developing a model of economic and financial system of Islām (EFSI) and reform the existing western systems in contemporary Muslim economies. Today, although we find a rapidly expanding Islāmic financial industry, it remains far from achieving the goals initially set for different sectors of this discipline. Leading Islāmic economists of our era are accepting the failure of Islāmic economics and some suggestions are made both about the underlying reasons as well as possible solutions. This paper first describes the goals and objectives of an Islāmic economic system. It argues why an EFSI, deriving its principles from Islāmic sources of knowledge, should put special emphasis on economic justice and equitable distribution of income. It then points out some basic features of the capitalist economies that are in conformity with an Islāmic economic system and discusses the shortcomings of the neoclassical school which provides the intellectual background for the capitalist system. These two exercises lead to comprehend the reasons for our failure: not addressing the issue of distribution of income and putting too much effort in criticizing the neoclassical assumptions on behavioral norms. This paper suggests areas where efforts should be made to transform the existing capitalist system into sustainable Islāmic economies based on Islāmic principles of socio economic justice.

2015

The sustainable development of Islamic economics as a discipline depends also on methodological development that provides a clear direction on how to appraise economic theories and provide evidence of its reliability. This paper attempts to study the methodology of Islamic economics in two ways: (1) by examining the works by scholars in their specific writings on this subject, and (2) by observing the writings on Islamic economics, banking and finance to see how Islamic economists develop their discipline. The paper found three categories of writings, namely: (1) the usul al-fiqh methodology applied in economics, (2) methodological pluralism that tries to utilize various methodologies developed in both western and Islamic tradition, and (3) conventional mainstream positive economic methodology applied in Islamic cases. These are evaluated thoroughly and suggestions are made as to what needs to be done to assist Islamic economics’ develop.

Social Science Research Network, 2017

This paper examines the nature, scope and methodology of Islamic economics, and draws attention to some possibilities for theoretical and empirical research in this field. Islamic economics is defined as the systematic study of the problem of allocation of resources, production of goods and services and distribution of output, income and wealth in an economy in the light of the Qur'ān and the Sunnah. It has relevance for not only Muslims but also others interested in durable solutions to problems of financial crises, inflation, unemployment, poverty and economic inequalities. The discipline is concerned with the description (of ground realities) and prescription (of solutions for economic issues) in the light of the leads in the Qur'ān and the Sunnah. The Sharīʿah basis of Islamic economics, with a supportive role for fiqh, holds the key in building Islamic economics. The approach recommended for this purpose is reconstruction of Islamic economics rather than Islamization of economics. On the theoretical side, this paper lays emphasis on basic research for strengthening the theory of Islamic economics to fill the knowledge gap on, among other things, Islamic economic system, Islamic economy, the Sharīʿahbased transactions matrix, nature and role of government in modern times and review of economic policy agenda. On the empirical side, it highlights some matters related to data and empirical work.

This article attempts to focus on the discipline of Islamic Economics in which why it is differ from any conventional economics such as capitalism, communism and etc. Firstly, the paper addresses the theories of economics such as Conventional Economics versus Islamic Economics. Secondly, it discusses on how Islam view attaining knowledge regards to economy as one of the most important knowledge (Fardh Kifayah) in the ummah. Finally, a proposal on the specific sub- ject of the the benefits of practising Islamic Economics will be presented in the article.

International Journal of Trade and Global Markets, 2013

Academic and practitioner's research interest in studying Islamic economics and finance seems to have been growing over the past few years especially after the financial crisis that hit the global banking and financial system, which resulted in one of the severest economic slowdown that we have had for many years. This paper aims to introduce some of the key concepts relating to Islamic economics and finance, the increased interest in this field of study and then to identify the main differences to the modern economic and financial system. All the sections of this paper will be based on reviewing some of the literature that studied this growing stream of an economic and financial discipline.

Share: Jurnal Ekonomi dan Keuangan Islam, 2021

There have been some studies related to the fundamental values of Islamic economics and finance. However, not many studies directly examine the relevance of the fundamental values of Islamic economics and finance to the modern contemporary economy. This study intends to examine the perception of Islamic economists on the relevance of the fundamental values of Islamic economics and finance to the contemporary economy. This research was conducted with a qualitative design by conducting a structured survey and in-depth interviews with 61 participants. Data analysis used in this research is collected from surveys and interviews from several sources and analyzed by qualitative descriptive method. The findings show that the Islamic economists perceived that the Islamic economics and finance fundamental values are relevant to contemporary modern economic conditions. The values are also considered better in overcoming economic and financial problems, thus achieving Islamic goals of public p...