Origins, Evolution and the Future
Studies in Islamic Finance, Accounting and Governance series
The day I met the late Dr Ahmad Al-Naggar, ‘the father of Islamic banking’ in the spring of 1982, turned out to be a turning point in my life. I was at that time a young PhD trained as a comparative economic historian. Dr Al-Naggar introduced me to Islamic finance. Combining the two disciplines has been an inseparable part of my academic life ever since. As a comparative economic historian, I have two strong objections to the way Islamic economics and finance are currently studied. First, I object vehemently to the argument that Islamic finance is just 40 years old. Definitely not, it is actually fifteen centuries old! Second, I object, equally vehemently, to the conventionalization of Islamic economics and finance. I am convinced that much of this conventionalization occurs because financial engineers are simply not aware about the achievements of their forefathers. Ignorance about these achievements leads to inferiority complexes and to a highly dynamic process of institutional borrowing. This process is so dynamic that much of modern Islamic finance boils down to the endless struggle between the financial engineers trying to imitate Western instruments and the Shari’ah authorities who are trying to control them. A major purpose of this book is to link Islamic economic/financial history not only to the present but even to the future and thus reduce institutional borrowing only to the most essential, so as to preserve the authenticity of Islamic economics and finance. I agree with Professor Abbas Mirakhor that the principles, laws and...