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The financial Tower of Babel: roots of crisis

Author

Listed:
  • Robin Matthews
  • Issam Tlemsani

Abstract

Purpose - The aim of this paper is to explore and discuss the causative factors of the current financial crisis from an Islamic perspective. This paper also examines Islamic finance as an alternative financial system and a potential long-term solution to financial instability. Design/methodology/approach - The paper provides descriptive, analytical and comparative analyses. Findings - The paper offers insights into the causes of the current international financial crisis. It highlights an alternative and a solution to this dilemma in the form of Islamic finance and stresses the stability of the Islamic finance system. Practical implications - The findings presented in this paper can be used by policy makers, regulators and practitioners in both the Islamic and conventional financial sector as they provides insights into factors that can insulate the market from future crisis. However, to expect a wholesale transformation to an Islamic financial system is idealistic. Originality/value - This paper contributes to the understanding of Islamic finance principles and its value as a solution to the current and any future financial crises. A highly original conceptual idea is used in the metaphorical comparison to the Tower of Babel. The findings of this research will be of interest to western and Islamic financial practitioners, policy makers and academicians.

Suggested Citation

  • Robin Matthews & Issam Tlemsani, 2010. "The financial Tower of Babel: roots of crisis," International Journal of Islamic and Middle Eastern Finance and Management, Emerald Group Publishing, vol. 3(4), pages 334-350, November.
  • Handle: RePEc:eme:imefpp:v:3:y:2010:i:4:p:334-350
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    References listed on IDEAS

    as
    1. Carmen M. Reinhart & Kenneth S. Rogoff, 2014. "This Time is Different: A Panoramic View of Eight Centuries of Financial Crises," Annals of Economics and Finance, Society for AEF, vol. 15(2), pages 1065-1188, November.
    2. George A. Akerlof, 2009. "How Human Psychology Drives the Economy and Why It Matters," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 91(5), pages 1175-1175.
    3. Carmen M. Reinhart & Kenneth S. Rogoff, 2009. "Varieties of Crises and Their Dates," Introductory Chapters,in: This Time Is Different: Eight Centuries of Financial Folly Princeton University Press.
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