Morality and Justice in Islamic Economics and Finance

Morality and Justice in Islamic Economics and Finance

Studies in Islamic Finance, Accounting and Governance series

Muhammad Umer Chapra

Mankind is faced with a number of serious problems that demand an effective solution. The prevalence of injustice and the frequency of financial crises are two of the most serious of these problems. Consisting of an in-depth introduction along with a selection of eight of Muhammad Umer Chapra's essays – four on Islamic economics and four on Islamic finance – this timely book raises the question of what can be done to not only minimize the frequency and severity of the financial crises, but also make the financial system more equitable.

Chapter 6: Innovation and authenticity in Islamic finance

Muhammad Umer Chapra

Subjects: asian studies, asian economics, economics and finance, asian economics, islamic economics and finance, money and banking


This implies that forward movement through progress and development is the lifeblood of societies. If societies do not move forward, they will not be able to remain stagnant for a long time; they will ultimately start declining. One of the essential requisites to enable societies to move forward is innovation. A well-known legal maxim of Islamic jurisprudence states that ‘something without which an obligation cannot be fulfilled is also obligatory’. (Shatibi, n.d., p._394; Zarqa, 1967, pp._784 and 1088; and Nadvi, 2000, p._480). If it is necessary for a society to move forward to prevent stagnation and decline, innovation is also, therefore, indispensable. Don Sheelan has expressed the same idea recently by saying that ‘innovation is the lifeblood of an organization’ and that ‘without it, not only is there no growth, but, inevitably, a slow death’ (Sheelan, 2007, p._3). There is, however, a snag that if the innovations are not well conceived, or if they are misused, they may create problems rather than solve them. The accelerated development that the world has witnessed after the Second World War would not have been possible without an unending stream of innovations. The financial system has decidedly played an active role in this development, also as a result of innovations, including the revolution in information and communications technology. The financial system is, however, now plagued by persistent crises. According to one estimate, there have been more than 100 crises over the last four decades (Stiglitz, 2003, p. 54).

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