Ethics-based financial transactions: An assessment of Islamic banking

Mohamed Ariff*

*Corresponding author for this work

Research output: Chapter in Book/Report/Conference proceedingChapterResearchpeer-review

1 Citation (Scopus)

Abstract

INTRODUCTION

This is an analytical chapter with the modest aim of assessing a 48-year old experiment commonly termed Islamic finance, which describes the profit sharing and risk-sharing contracting in financial transactions as being ethically consistent with human welfare. Profit-earning after risk-sharing in debt contracts (as has always been the case throughout history in equity contracts) has been practiced in financial dealings in settled societies for over four millennia, before the birth of modern banking practices which are debt-based on no risk-sharing, with pre-agreed fixed interest charges. In just 48 years, the ethics-based Islamic finance has gained a respectable foothold in some 76 countries, including seven major financial centers, as will be supported by evidence in this chapter. Its presence is felt in many countries. With the Bank of England’s adoption of a landmark liberal regulation in 2002, after careful study over many years, to accept Islamic financial institutions as another niche in banking, the pace of growth of adoption of this experiment has substantially accelerated. These two facets – foothold and wider recognition – have been hard earned, and deservedly so, if one were to examine Islamic finance as an alternative ethics-based financial practice, which it is claimed to be. 
Original languageEnglish
Title of host publicationThe foundations of Islamic banking
Subtitle of host publicationTheory, practice and education
EditorsM Ariff, M Iqbal
PublisherEdward Elgar Publishing
Pages11-38
Number of pages28
ISBN (Print)9781849807920
DOIs
Publication statusPublished - 2011

Fingerprint Dive into the research topics of 'Ethics-based financial transactions: An assessment of Islamic banking'. Together they form a unique fingerprint.

  • Related Research Outputs

    • 1 Citations
    • 1 Scholarly edition

    The foundations of Islamic banking: Theory, practice and education

    Ariff, M. & Iqbal, M., 2011, Cheltenham, UK: Edward Elgar Publishing. 283 p.

    Research output: Book/ReportScholarly editionResearchpeer-review

  • 3 Citations (Scopus)

    Cite this

    Ariff, M. (2011). Ethics-based financial transactions: An assessment of Islamic banking. In M. Ariff, & M. Iqbal (Eds.), The foundations of Islamic banking: Theory, practice and education (pp. 11-38). Edward Elgar Publishing. https://doi.org/10.4337/9781849807937.00008