Principles and Practice, Second Edition
Chapter 8: Islamic finance: a tentative verdict
What does Islamic finance bring us? We can ask this question with different things in mind. First, one may wonder how Islamic finance performs set against the standards of conventional finance. This is not the only yardstick by which Islamic finance should be measured. Islamic finance was not primarily introduced because of any alleged technical superiority, even if the wildest claims have been made by its advocates. It was first and foremost propagated as an alternative for, and a radical departure from, conventional finance, enabling its practitioners and its clients to follow the commandments of God. A legitimate question then is whether it really delivers the goods, from an Islamic point of view. We shall discuss the first question, but before we turn to the second one, we will have a look at the potential demand for Islamic financial products. All the time, it must be kept in mind that judgements can only be of a tentative character, as Islamic banking and finance is a work in progress, even if it is by now an established fixture in the financial landscape. The chapter ends with a more subjective postscript. Quite apart from the spiritual side of sharia-compliant banking and finance, what are its potential strong points in comparison with conventional banking and finance; and, subsequently, do they materialize?
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