Islamic finance revisited: conceptual and analytical issues from the perspective of conventional economics
AbstractAfter a brief recent empirical sketch of Islamic finance, the paper turns to its main theoretical and conceptual purpose. It seeks to relate the concepts of Islamic and conventional finance, and to examine certain important questions which arise from the interaction between these systems. The paper is written from the perspective of conventional modern economics, as the authors are students of the latter. The paper discusses the main tenets of Islamic finance, as well as those of modern economics, including the implications of zero interest rates and those of Modigliani and Miller theorems. The most notable finding of this paper is that John Maynard Keynes’ analysis of employment, interest and money provides, inadvertently, the best rationale for some of the basic precepts of Islamic finance. The paper concludes that there is no inevitable conflict between the two systems and cooperation between them is eminently desirable and feasible.
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Bibliographic InfoPaper provided by University Library of Munich, Germany in its series MPRA Paper with number 39007.
Date of creation: 14 Nov 2011
Date of revision: 10 Apr 2012
Publication status: Published in Cambridge University CBR Working Paper Working Paper 430.2012(2012): pp. 1-35
Islamic Finance; Moral Hazard; Keynes; Zero Interest Rates; Usuary;
Other versions of this item:
- Sheng, A. & Singh, A., 2012. "Islamic Finance Revisited: Conceptual and Analytical Issues from the Perspective of Conventional Economics," ESRC Centre for Business Research - Working Papers wp430, ESRC Centre for Business Research.
- Sheng, Andrew & Singh, Ajit, 2013. "Islamic Finance Revisited: Conceptual and Analytical Issues from the Perspective of Conventional Economics," MPRA Paper 53036, University Library of Munich, Germany.
- A13 - General Economics and Teaching - - General Economics - - - Relation of Economics to Social Values
- E40 - Macroeconomics and Monetary Economics - - Money and Interest Rates - - - General
- B41 - Schools of Economic Thought and Methodology - - Economic Methodology - - - Economic Methodology
This paper has been announced in the following NEP Reports:
- NEP-ALL-2012-06-05 (All new papers)
- NEP-ARA-2012-06-05 (MENA - Middle East & North Africa)
- NEP-HPE-2012-06-05 (History & Philosophy of Economics)
- NEP-PKE-2012-06-05 (Post Keynesian Economics)
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
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