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Divergence Between Aspirations And Realities Of Islamic Economics: A Political Economy Approach To Bridging The Divide

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  • Nazim Zaman
  • Mehmet Asutay

Abstract

Early writings in Islamic economics depicted a grand and, some would say, utopian image of the type of societal development that would result from implementing Islamic social and economic theory. However, despite the emergence of Islamic economics in a modern sense in the 1960s, we now find that the only manifestation that represents an Islamic alternative to mainstream neo-classical development is the Islamic banking and finance industry (IBF). However, the developments in the IBF industry indicate that it has converged towards conventional finance. Consequently, it has failed to fulfil the institutional and policy aspirations of Islamic economic system. This paper, thus, attempts to identify how such divergence has taken place, presents a conceptual model of development in Islam that goes beyond mere economics and fiqh considerations and suggests a political economy approach to demonstrate that the foundational axioms in fact rely wholly on major institutional implementation. It also identifies the pre-requisites for achieving this that includes political vision, will and leadership.

Suggested Citation

  • Nazim Zaman & Mehmet Asutay, 2009. "Divergence Between Aspirations And Realities Of Islamic Economics: A Political Economy Approach To Bridging The Divide," IIUM Journal of Economics and Management, IIUM Journal of Economis and Management, vol. 17(1), pages 73-96, June.
    • Handle: RePEc:ije:journl:v:17:y:2009:i:1:p:73-96
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    References listed on IDEAS

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    1. Hasan, Zubair, 2005. "Islamic banking at the crossroads: theory versus practice," MPRA Paper 2821, University Library of Munich, Germany.
    2. Zaman, Asad, 2008. "Islamic Economics: A Survey of the Literature," MPRA Paper 11024, University Library of Munich, Germany.
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    Cited by:

    1. Shatila Kh. & Ushakov D. S., 2021. "Evaluation of Islamic rural banks," Russian Journal of Social Sciences and Humanities, Omsk Humanitarian Academy, vol. 15(3), pages 169-181, September.
    2. Noha Farrag & Hebatallah Ghoneim, 2016. "Challenges to the Development of an Islamic Economic System," Working Papers 42, The German University in Cairo, Faculty of Management Technology.
    3. Lamido , Abdullahi Abubakar & Haneef, Mohamed Aslam, 2021. "Shifting the paradigms in waqf economics: towards renewed focus on socioeconomic development," Islamic Economic Studies, The Islamic Research and Training Institute (IRTI), vol. 29, pages 18-32.
    4. Kader, Haithem, 2021. "Human well-being, morality and the economy: an Islamic perspective," Islamic Economic Studies, The Islamic Research and Training Institute (IRTI), vol. 28, pages 102-123.
    5. Zaman, Arshad & Zaman, Asad, 2001. "Interest And The Modern Economy," Islamic Economic Studies, The Islamic Research and Training Institute (IRTI), vol. 8, pages 61-74.
    6. Mehmet Asutay, 2013. "Islamic moral economy as the foundation of Islamic finance," Chapters, in: Valentino Cattelan (ed.), Islamic Finance in Europe, chapter 4, pages 55-68, Edward Elgar Publishing.
    7. Abdul Razak, Azila & Asutay, Mehmet, 2022. "Financial inclusion and economic well-being: Evidence from Islamic Pawnbroking (Ar-Rahn) in Malaysia," Research in International Business and Finance, Elsevier, vol. 59(C).
    8. Hassan, M. Kabir & Aliyu, Sirajo, 2018. "A contemporary survey of islamic banking literature," Journal of Financial Stability, Elsevier, vol. 34(C), pages 12-43.
    9. Hamidi, M. Luthfi & Worthington, Andrew C., 2018. "Islamic Social Banking: The Way Forward," Jurnal Ekonomi Malaysia, Faculty of Economics and Business, Universiti Kebangsaan Malaysia, vol. 52(1), pages 179-190.
    10. Volker Nienhaus, 2014. "Religion and development," Chapters, in: M. Kabir Hassan & Mervyn K. Lewis (ed.), Handbook on Islam and Economic Life, chapter 28, pages iii-iii, Edward Elgar Publishing.

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    More about this item

    Keywords

    Islamic economics; Political economy; Islamic development;
    All these keywords.

    JEL classification:

    • E41 - Macroeconomics and Monetary Economics - - Money and Interest Rates - - - Demand for Money
    • G24 - Financial Economics - - Financial Institutions and Services - - - Investment Banking; Venture Capital; Brokerage
    • Z12 - Other Special Topics - - Cultural Economics - - - Religion

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