Islamic Finance at Crossroads

Authors

  • Mabid Al-Jarhi

Abstract

After more than 40 years of practice, the Islamic finance industry
is composed of products with claim of Islamicity but questionable on their
Shariʽah credentials. The industry is increasingly exposed to cynicism and
decline in popular interest. This paper restates the essence of riba prohibition
from an economic perspective. It evaluates the Shariʽah scholars approach to
validation of contracts as well as the monetary authorities’ attitude towards the
Shariʽah content of Islamic finance transactions. It points out the advantages
of Islamic finance within an Islamic macroeconomic environment. It looks into
the problem of convergence of Islamic finance to conventional finance, and
reasons behind the convergence. This study finds that several violations of the
true paradigm of Islamic finance are because of its advantages being all external
and impossible to internalize. The paper concludes with some proposals for
checking the convergence.

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Published

2018-11-18

How to Cite

Al-Jarhi, M. (2018). Islamic Finance at Crossroads. Intellectual Discourse, 26(2), 431–462. Retrieved from https://journals.iium.edu.my/intdiscourse/index.php/islam/article/view/1200