The Role of Islamic Finance in Achieving Sustainable Development: Islamic Banks as a Model
DOI:
https://doi.org/10.31436/ijfus.v9i2.379Keywords:
Islamic Finance, Sustainable Development, Islamic Banking, Social Impact Finance, Environmental FinanceAbstract
This research examined the role of Islamic finance in achieving sustainable development goals through a case study of Islamic banks. The research also reviewed Islamic banks’ contribution to promoting social justice through zakah, waqf, qarḍ ḥasan (benevolent loans), and financing community and educational projects, which reflects on poverty reduction and enhancing solidarity. Additionally, light was shed on the environmental role that banks can play through financing environmentally friendly projects. The research adopted a descriptive analytical approach through analyzing relevant literature and published financial data. The study concluded that Islamic financing formulas have great capacity to support vital sectors such as education and health, if directed toward sustainable development projects. The research also concluded that Islamic banks, with their Sharīʿah flexibility and financial capabilities, are capable of being a fundamental lever for achieving sustainable development in Islamic and global communities. The research ended with a call to establish specialized sustainable development units within the institutional structure of Islamic banks, aiming to activate this role more effectively. The research recommends enhancing transparency and Sharīʿah governance in Islamic banks and directing financial products toward achieving social and environmental impact alongside economic returns.
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