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Cultural Financial Traditions and Universal Ethics: the Case of Hawala

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  • Dulce Redin

    ()
    (School of Economics and Business Administration, University of Navarra)

  • Reyes Calderón

    ()
    (School of Economics and Business Administration, University of Navarra)

  • Ignacio Ferrero

    ()
    (School of Economics and Business Administration, University of Navarra)

Abstract

Taking into account the global expansion that certain traditional financial practices like hawala have experienced in the last decades, it is undeniable that both cultural diversity and different moral perceptions have become relevant questions in the international financial arena. Consequently, hawala, an ancient financial system profoundly rooted in Islamic moral traditions, offers an extraordinary setting to explore over a real institution the theoretical debate about the potential universality of ethics. Moreover, hawala makes us think over the relationship among legality, formality and morality. This paper discusses the economic, social and ethical features of hawala, in order to shed some light into the question of whether diverse economic phenomena may be judged under Western standards or rather it is necessary to appeal to a superior body of universal values, respectful with the different cultures and religions. The authors show that the current —legalistic— approach to hawala results overly partial and biased. Therefore they conclude that it is essential to bring about a change towards a more ethically, culturally and economically sensitive approach, which would enable hawala to develop its full potential and become a vehicle for financial and economic development. It is necessary to consider the “hyper-norms” and fundamental principles inherent to humanity, which are common to both “formal” and “informal”, “Western” and “non-Western” financial practices, when designing a legal framework for these cultural financial traditions.

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File URL: http://www.unav.es/facultad/econom/files/workingpapersmodule/@random50169a3d22927/1352897641_WP_UNAV_08_12.pdf
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Bibliographic Info

Paper provided by School of Economics and Business Administration, University of Navarra in its series Faculty Working Papers with number 08/12.

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Length: 37 pages
Date of creation: 14 Nov 2012
Date of revision:
Handle: RePEc:una:unccee:wp0812

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Web page: http://www.unav.es/facultad/econom

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  1. Schramm, Matthias & Taube, Markus, 2003. "Evolution and institutional foundation of the hawala financial system," International Review of Financial Analysis, Elsevier, vol. 12(4), pages 405-420.
  2. Thompson, Edwina, 2011. "Trust is the Coin of the Realm: Lessons from the Money Men in Afghanistan," OUP Catalogue, Oxford University Press, number 9780199062980, September.
  3. Mahmoud Mohieldin, 2012. "Realizing the Potential of Islamic Finance," World Bank Other Operational Studies 10051, The World Bank.
  4. Domènec Melé & Antonio Argandoña & Carlos Sanchez-Runde, 2011. "Facing the Crisis: Toward a New Humanistic Synthesis for Business," Journal of Business Ethics, Springer, vol. 99(1), pages 1-4, March.
  5. Clive Boddy, 2011. "The Corporate Psychopaths Theory of the Global Financial Crisis," Journal of Business Ethics, Springer, vol. 102(2), pages 255-259, August.
  6. Mark Blodgett, 2011. "Substantive Ethics: Integrating Law and Ethics in Corporate Ethics Programs," Journal of Business Ethics, Springer, vol. 99(1), pages 39-48, February.
  7. Stephen G. Cecchetti, 2009. "Crisis and Responses: The Federal Reserve in the Early Stages of the Financial Crisis," Journal of Economic Perspectives, American Economic Association, vol. 23(1), pages 51-75, Winter.
  8. Kevin Brown, 2010. "The Economics and Ethics of Mixed Communities: Exploring the Philosophy of Integration Through the Lens of the Subprime Financial Crisis in the US," Journal of Business Ethics, Springer, vol. 97(1), pages 35-50, November.
  9. Thompson, Edwina A., 2011. "Trust is the Coin of the Realm: Lessons from the Money Men in Afghanistan," OUP Catalogue, Oxford University Press, number 9780195473520, September.
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