IDEAS home Printed from https://ideas.repec.org/a/abd/kauiea/v34y2021i1no4p67-78.html
   My bibliography  Save this article

The World Economy and Islamic Economics in the Time of COVID-19 الاقتصاد العالمي والاقتصاد الإسلامي في زمن كوفيد-19

Author

Listed:
  • Abdelhafid Benamraoui

    (Principal Lecturer in Finance, Westminster Business School, University of Westminster, United Kingdom)

Abstract

COVID-19 has brought unprecedented challenges to the world economy that have never been experienced before, including a sharp decline in economic output and substantial increase in the level of unemployment. The aim of this paper is to critically discuss the effects caused by COVID-19 on the world economy and financial markets, the actions taken by the governments and corporations to withstand these effects, and what Islamic economics and finance can offer to improve the resilience of the economy while the pandemic is still ongoing. To address this aim, we adopt both deductive and inductive research philosophical approaches as this enables us to understand the economic implications brought about by COVID-19 systematically. We base our analysis on various data sources including government reports, reports published by international organizations, such as the IMF (International Monetary Fund), OECD (Organization for Economic Co-operation and Development), the World Bank, and other relevant secondary data sources. Our analysis shows that the pandemic has contributed to a sharp fall in economic output, to substantial increase in unemployment, to rise in markets’ volatility, and to the deterioration in the financial status of corporations, particularly in certain industries such as airline, hospitality, tourism, and energy. The review of the governments’ actions taken across the globe in response to these effects indicate a variation in the monetary and fiscal measures introduced in terms of their scale and scope. The same applies to the decisions made at corporate level. The analysis reveals that Islamic finance and economics provides a number of solutions to the COVID-19 economic effects through its key principles and investment vehicles, including profit and loss sharing, takāful, and waqf. تسببت جائحة كرونا كُوفيد-19 في إبراز العديد من التحديات غير المسبوقة في الاقتصاد العالمي المتمثلة في الانخفاض الحاد في الناتج الاقتصادي، والزيادة الكبيرة في مستويات البطالة. يهدف هذا البحث إلى مناقشة آثار كوفيد-19 على الاقتصاد العالمي والأسواق المالية والإجراءات التي اتخذتها الحكومات والشركات لمواجهة هذه الآثار وما يمكن للاقتصاد والتمويل الإسلامي أن يقدمه لتحسين وضعية الاقتصاد الذي ما زال يعاني من آثار هذه الجائحة. ولتحقيق هذا الهدف، استخدم البحث كل المناهج البحث الفلسفية الاستنتاجية والاستقرائية لفهم الآثار الاقتصادية الناجمة عن كوفيد-19 بشكل منهجي. اعتمد التحليل في هذا البحث على بيانات متنوعة تشمل التقارير الحكومية المنشورة من قبل المنظمات الدولية، كصندوق النقد الدولي، ومنظمة التعاون الاقتصادي والتنمية، والبنك الدولي، علاوة على بيانات ثانوية أخرى ذات صلة بالموضوع. ويظهر التحليل أن الوباء قد ساهم في انخفاض حاد في الناتج الاقتصادي، وزيادة كبيرة في البطالة، وزيادة في تقلب الأسواق، وتدهور الوضع المالي للشركات، لا سيما بعض الصناعات كالطيران، والفنادق، والسياحة، والطاقة. وتشير مراجعة الإجراءات التي اتخذتها الحكومات في جميع أنحاء العالم إلى تباين في التدابير النقدية والمالية المقدمة من حيث نطاقها. وينطبق الأمر نفسه على القرارات المتخذة على مستوى الشركات. كما يكشف البحث بأن التمويل والاقتصاد الإسلامي يقدمان عددًا من الحلول لمواجهة الآثار الاقتصادية لكوفيد-19 من خلال مبادئه الرئيسة وأدواته الاستثمارية بما في ذلك تقاسم الأرباح والخسائر، والتكافل، والوقف.

Suggested Citation

  • Abdelhafid Benamraoui, 2021. "The World Economy and Islamic Economics in the Time of COVID-19 الاقتصاد العالمي والاقتصاد الإسلامي في زمن كوفيد-19," Journal of King Abdulaziz University: Islamic Economics, King Abdulaziz University, Islamic Economics Institute., vol. 34(1), pages 67-78, January.
    • Handle: RePEc:abd:kauiea:v:34:y:2021:i:1:no:4:p:67-78
    DOI: 10.4197/Islec.34-1.4
    as

    Download full text from publisher

    File URL: https://iei.kau.edu.sa/Files/121/Files/153866_34-01-04-ABenamri-16022021.pdf
    Download Restriction: no
    File URL: https://libkey.io/10.4197/Islec.34-1.4?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    References listed on IDEAS

    as
    1. Albers, Sascha & Rundshagen, Volker, 2020. "European airlines′ strategic responses to the COVID-19 pandemic (January-May, 2020)," Journal of Air Transport Management, Elsevier, vol. 87(C).
    2. Pragyan Deb & Davide Furceri & Jonathan D. Ostry & Nour Tawk, 2022. "The Economic Effects of COVID-19 Containment Measures," Open Economies Review, Springer, vol. 33(1), pages 1-32, February.
    3. Roszaini Haniffa & Mohammad Hudaib, 2007. "Exploring the Ethical Identity of Islamic Banks via Communication in Annual Reports," Journal of Business Ethics, Springer, vol. 76(1), pages 97-116, November.
    4. Al-Awadhi, Abdullah M. & Alsaifi, Khaled & Al-Awadhi, Ahmad & Alhammadi, Salah, 2020. "Death and contagious infectious diseases: Impact of the COVID-19 virus on stock market returns," Journal of Behavioral and Experimental Finance, Elsevier, vol. 27(C).
    5. Sigala, Marianna, 2020. "Tourism and COVID-19: Impacts and implications for advancing and resetting industry and research," Journal of Business Research, Elsevier, vol. 117(C), pages 312-321.
    6. Michael Halling & Jin Yu & Josef Zechner, 2020. "How Did COVID-19 Affect Firms’ Access to Public Capital Markets?," The Review of Corporate Finance Studies, Society for Financial Studies, vol. 9(3), pages 501-533.
    7. Kelly Phipps, 2012. "Spirituality and Strategic Leadership: The Influence of Spiritual Beliefs on Strategic Decision Making," Journal of Business Ethics, Springer, vol. 106(2), pages 177-189, March.
    8. Haroutunian, Stephan & Hauptmeier, Sebastian & Leiner-Killinger, Nadine, 2020. "The COVID-19 crisis and its implications for fiscal policies," Economic Bulletin Boxes, European Central Bank, vol. 4.
    9. Khawla Bourkhis & Mahmoud Sami Nabi, 2013. "Islamic and conventional banks' soundness during the 2007–2008 financial crisis," Review of Financial Economics, John Wiley & Sons, vol. 22(2), pages 68-77, April.
    10. Ahmed, Habib, 2002. "A Microeconomic Model of an Islamic Bank (Research Paper)," Occasional Papers 54, The Islamic Research and Teaching Institute (IRTI).
    11. Michael Halling & Jin Yu & Josef Zechner, 0. "How Did COVID-19 Affect Firms’ Access to Public Capital Markets?," Review of Corporate Finance Studies, Oxford University Press, vol. 9(3), pages 501-533.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Garaus, Marion & Hudáková, Melánia, 2022. "The impact of the COVID-19 pandemic on tourists’ air travel intentions: The role of perceived health risk and trust in the airline," Journal of Air Transport Management, Elsevier, vol. 103(C).
    2. Bo Becker & Efraim Benmelech, 2021. "The Resilience of the U.S. Corporate Bond Market During Financial Crises," NBER Working Papers 28868, National Bureau of Economic Research, Inc.
    3. Isil Erel & Jack Liebersohn, 2020. "Does FinTech Substitute for Banks? Evidence from the Paycheck Protection Program," NBER Working Papers 27659, National Bureau of Economic Research, Inc.
    4. Ducret, Romain, 2021. "Investors' perception of business group membership during an economic crisis : Evidence from the COVID-19 pandemic," FSES Working Papers 524, Faculty of Economics and Social Sciences, University of Freiburg/Fribourg Switzerland.
    5. Tasawar Nawaz, 2019. "Exploring the Nexus Between Human Capital, Corporate Governance and Performance: Evidence from Islamic Banks," Journal of Business Ethics, Springer, vol. 157(2), pages 567-587, June.
    6. Matthew Spiegel & Heather Tookes, 2021. "Business Restrictions and COVID-19 Fatalities [The immediate effect of COVID-19 policies on social distancing behavior in the United States]," The Review of Financial Studies, Society for Financial Studies, vol. 34(11), pages 5266-5308.
    7. Mehreen Mehreen & Maran Marimuthu & Samsul Ariffin Abdul Karim & Amin Jan, 2020. "Proposing a Multidimensional Bankruptcy Prediction Model: An Approach for Sustainable Islamic Banking," Sustainability, MDPI, vol. 12(8), pages 1-18, April.
    8. Yousaf, Imran, 2021. "Risk transmission from the COVID-19 to metals and energy markets," Resources Policy, Elsevier, vol. 73(C).
    9. Szczygielski, Jan Jakub & Charteris, Ailie & Bwanya, Princess Rutendo & Brzeszczyński, Janusz, 2023. "Which COVID-19 information really impacts stock markets?," Journal of International Financial Markets, Institutions and Money, Elsevier, vol. 84(C).
    10. Umar, Zaghum & Manel, Youssef & Riaz, Yasir & Gubareva, Mariya, 2021. "Return and volatility transmission between emerging markets and US debt throughout the pandemic crisis," Pacific-Basin Finance Journal, Elsevier, vol. 67(C).
    11. Rahman, Md Lutfur & Al Mamun, Mohammed Abdullah, 2021. "How resilient are the Asia Pacific financial markets against a global pandemic?," Pacific-Basin Finance Journal, Elsevier, vol. 69(C).
    12. Chaudhry Ghafran & Sofia Yasmin, 2020. "Ethical Governance: Insight from the Islamic Perspective and an Empirical Enquiry," Journal of Business Ethics, Springer, vol. 167(3), pages 513-533, December.
    13. Kyungkook Kim & Keun Tae Cho, 2021. "A Review of Global Collaboration on COVID-19 Research during the Pandemic in 2020," Sustainability, MDPI, vol. 13(14), pages 1-23, July.
    14. Gopalakrishnan, Balagopal & Jacob, Joshy & Mohapatra, Sanket, 2021. "Government responses, business continuity, and management sentiment: Impact on debt financing during COVID-19," IIMA Working Papers WP 2021-04-03, Indian Institute of Management Ahmedabad, Research and Publication Department.
    15. Alfano, Vincenzo & Ercolano, Salvatore & Pinto, Mauro, 2022. "Carrot and stick: Economic support and stringency policies in response to COVID-19," Evaluation and Program Planning, Elsevier, vol. 94(C).
    16. Rekha Pillai & Husam-Aldin N. Al-Malkawi & M. Ishaq Bhatti, 2021. "Assessing Institutional Dynamics of Governance Compliance in Emerging Markets: The GCC Real Estate Sector," JRFM, MDPI, vol. 14(10), pages 1-18, October.
    17. Michela Piccarozzi & Cecilia Silvestri & Patrizio Morganti, 2021. "COVID-19 in Management Studies: A Systematic Literature Review," Sustainability, MDPI, vol. 13(7), pages 1-28, March.
    18. Wenmin Wu & Chien-Chiang Lee & Wenwu Xing & Shan-Ju Ho, 2021. "The impact of the COVID-19 outbreak on Chinese-listed tourism stocks," Financial Innovation, Springer;Southwestern University of Finance and Economics, vol. 7(1), pages 1-18, December.
    19. Ali Gungoraydinoglu & Ilke Öztekin & Özde Öztekin, 2021. "The Impact of COVID-19 and Its Policy Responses on Local Economy and Health Conditions," JRFM, MDPI, vol. 14(6), pages 1-27, May.
    20. Nabi, Mahmoud Sami, 2012. "Dual Banking and Financial Contagion," Islamic Economic Studies, The Islamic Research and Training Institute (IRTI), vol. 20, pages 29-54.

    More about this item

    Keywords

    COVID-19; Corporate financial measures; Government financial measures; Islamic economics; Islamic finance; World economy. كوفيد-19، الإجراءات المالية للشركات، الإجراءات المالية الحكومية، الاقتصاد الإسلامي، التمويل الإسلامي، الاقتصاد العالمي.;
    All these keywords.

    JEL classification:

    • E52 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Monetary Policy
    • E58 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Central Banks and Their Policies
    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages
    • G28 - Financial Economics - - Financial Institutions and Services - - - Government Policy and Regulation
    • P40 - Political Economy and Comparative Economic Systems - - Other Economic Systems - - - General

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:abd:kauiea:v:34:y:2021:i:1:no:4:p:67-78. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: King Abdulaziz University, Islamic Economics Institute. (email available below). General contact details of provider: https://edirc.repec.org/data/cikausa.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.