scholarly journals EFFECTIVE CRISIS MANAGEMENT FOR ISLAMIC FINANCIAL INDUSTRY AND THE INSTITUTION OF HISBAH: LESSONS FROM GLOBAL FINANCIAL CRISIS

2016 ◽  
Vol 5 (1) ◽  
Author(s):  
Najeeb Zada ◽  
Ahcene Lahsasna ◽  
Muhammad Yusuf Saleem
Keyword(s):  
Financial Crisis ◽  
Moral Hazard ◽  
Crisis Management ◽  
Deposit Insurance ◽  
Global Financial Crisis ◽  
Financial Institution ◽  
Islamic Finance ◽  
Financial Industry ◽  
Finance Industry ◽  
The Global Financial Crisis

The recent financial crisis resulted destructive effects on finance industry. Islamic financial industry (IFI) is still naïve and largely untested in the face of a major financial turmoil. Major issues and uncertainties of the insolvency of IFI include the issue of moral hazard, government bailouts, excessive risk taking and deposit insurance. This paper addresses the issue of crisis management in IFI from the perspective of al-Siyasah al-Shar’iyyah and attempts to derive public policy guidelines that are useful in developing a timely and efficient crises management framework for Islamic finance industry. By using qualitative methods, the study found that the global financial crisis resulted in great destruction of financial institution. Although Islamic finance was quite immune to the global crisis as compared to its conventional peer, concerns still exist. It is time that Islamic finance industry learns from the financial woes of the rest of the world. =========================================== Krisis keuangan baru-baru ini mengakibatkan efek destruktif pada industri keuangan. Industri keuangan Islam (IKI) masih naif dan sebagian besar belum teruji dalam menghadapi gejolak keuangan besar. Isu utama dan ketidakpastian dari kebangkrutan IKI meliputi moral hazard, dana talangan pemerintah, pengambilan risiko yang berlebihan dan asuransi deposito. Makalah ini membahas isu manajemen krisis dalam IKI dari perspektif al-Siyasah al-Shar'iyyah dan berusaha mendapatkan pedoman kebijakan publik yang bermanfaat dalam mengembangkan kerangka kerja manajemen krisis yang tepat waktu dan efisien bagi IKI. Dengan menggunakan metode kualitatif, studi ini menemukan bahwa krisis keuangan global mengakibatkan kehancuran besar bagi industri keuangan. Meskipun keuangan Islam cukup kebal terhadap krisis global dibandingkan dengan keuangan konvensional, kekhawatiran masih ada. Sudah saatnya industri keuangan Islam belajar dari krisis keuangan dari seluruh dunia.

The global financial crisis and Islamic finance: a review of selected literature

2015 ◽  
Vol 6 (1) ◽  
pp. 94-106 ◽  
Author(s):  
Abdou DIAW
Keyword(s):  
Financial Crisis ◽  
Risk Sharing ◽  
Global Financial Crisis ◽  
Financial System ◽  
Lessons Learned ◽  
Islamic Finance ◽  
Regulatory Body ◽  
Content Type ◽  
The Global Financial Crisis ◽  
The Way

Purpose – This paper aims to critically analyze the opinions of Islamic economists about the global financial crisis to examine: their views on the causes of the crisis, the juristic and economic assessment they make of these causes and the lessons learned and the way forward. Design/methodology/approach – The paper critically reviews selected writings of prominent Islamic economics on the recent financial crisis. Findings – Most of the authors reviewed acknowledged the technical mistakes put forth by many conventional analysts as causes of the crisis. However, they have showed that the adoption of the principles of Islamic finance would have prevented most of those mistakes. The way forward, therefore, for both Islamic and conventional finance is, inter alia, greater reliance on risk sharing to inject more discipline in the system; the establishment of a strong and comprehensive regulatory body to safeguard the resilience of the system; and the integration of Zakat, Awqaf and other voluntary institutions into the financial system to cater for the financial needs of the poor. Practical implications – The importance of integrating the voluntary institutions into the financial system is to make it more inclusive and more equitable. Originality/value – This paper is the most comprehensive literature review on Islamic finance and the global financial crisis.

Islamic Banking and Finance in India: A Kosher or Myth

2015 ◽  
Vol 1 (1) ◽  
pp. 01
Author(s):  
Aisha Badruddin
Keyword(s):  
Financial Crisis ◽  
Global Financial Crisis ◽  
Islamic Finance ◽  
Islamic Banking ◽  
South East Asia ◽  
Conventional System ◽  
Muslim Community ◽  
Banking And Finance ◽  
The World ◽  
The Global Financial Crisis

Islamic banking seems to be an unfamiliar concept in Indian economy. Besides having a huge potential, Islamic finance is considered to be infeasible and impractical in Indian conventional system of banking. The search for alternatives to conventional banking in the aftermath of the global financial crisis trained the spotlights on Islamic banking in many parts of the world. Today that Islamic banking has unfortunately been misunderstood in India as a religious charitable venture restricted to the country’s Muslim community. Despite its striking growth in other parts of world such as the Middle East, South East Asia (which chiefly include Malaysia and Indonesia) and Europe, it is yet to be positioned as a realistic alternative financial system and not a religious one. In this paper, an attempt is made to understand the underlying concept of Islamic banking and finance and erode some of the major misconceptions in the same context.

How crisis-proof is Islamic finance?

2018 ◽  
Vol 10 (4) ◽  
pp. 415-426 ◽  
Author(s):  
Hasnan Baber
Keyword(s):  
Financial Crisis ◽  
Financial Crises ◽  
Global Financial Crisis ◽  
Islamic Finance ◽  
Islamic Banks ◽  
Actual Performance ◽  
Content Type ◽  
Current Financial Crisis ◽  
Conventional Banks ◽  
The Global Financial Crisis

PurposeThis paper aims to explore Islamic finance’s resilience in times of financial crisis and considers Islamic finance’s viability as an alternative to the current financial system.Design/methodology/approachEstablished on a review of theoretical aspects underlying the notion of Islamic finance being proficient of reducing the harshness of financial crises and a latent solution to financial volatility, this paper assesses actual performance of Islamic and conventional banks during and in the repercussion of the current financial crisis. Interviews were also conducted with managers of Islamic banks.FindingsThe paper concludes that performance of Islamic banks during the global financial crisis is found to be supportive of their argued resilience and consistency. However, the latest financial crisis has brought to light a number of theoretical and realistic issues that challenge Islamic finance and its absorbing capacity against financial crises.Originality/valueThe paper is an original work which suggests about moderating risks and proposing various ways in which the Islamic finance can be made more stable and resilient.

scholarly journals Islamic Finance and its Contribution to Solving the Current Financial Crisis

2010 ◽  
Author(s):  
Mohamed Sharif Bashir
Keyword(s):  
Financial Crisis ◽  
Global Financial Crisis ◽  
Jel Classification ◽  
Islamic Finance ◽  
Credit Crisis ◽  
Commercial Activities ◽  
Classification Code ◽  
Direct Lending ◽  
Current Financial Crisis ◽  
The Global Financial Crisis

As a result of the global financial crisis and its effects on the world economy, there is an increasing awareness and exploration of more vigorous frameworks and types of financial tools and intermediations. With its emphasis on asset-backed transactions, Islamic finance can contribute to overcoming the challenges and difficulties created by the current credit crisis. At its core, Islamic finance is concerned with the deployment of capital in genuine commercial activities that will benefit the whole world. So far, the techniques used in Islamic finance, if applied and executed properly, have created a much closer relationship among the customer, the financier, and the asset. In both principle and practice, Islamic finance prohibits the creation of debt through direct lending and borrowing, thus prohibiting excessive leverage, which is a root cause of the financial crisis. This paper highlights the strengths of Islamic finance in the context of the current financial and economic crisis. This paper examines whether Islamic finance could help to provide an alternative approach to the problems that led to the crisis that would prevent the repetition of a similar crisis in the future.   Keywords: Islamic finance; Islamic financial system; financial crisis; profit-loss sharing; risk management. JEL Classification Code: G01; G21; G32, Z12.

Sign in / Sign up

Export Citation Format

Share Document