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The Integrity of Islamic Finance

In: Ethical Discourse in Finance

Author

Listed:
  • Marizah Minhat

    (Edinburgh Napier University)

  • Nazam Dzolkarnaini

    (Edinburgh Napier University)

  • Mazni Abdullah

    (University of Malaya)

Abstract

This chapter provides a critical account of popularly used Islamic financial instruments and discusses the gap between theory and practice in Islamic financial industry. The critical discussion is mainly related to financial innovations, which were derived from concepts including murabahah, ijarah and sukuk. Empirical evidence and/or real-life examples are illustrated to elucidate points. The central thesis of this chapter suggests that an ideal Islamic principle of risk-sharing has not been successfully implemented due to challenges associated with governance (or lack thereof) and behavioural factors including perverse incentives. A solution can be found through effective stakeholders’ education and activism to steer the Islamic finance industry in the right direction.

Suggested Citation

  • Marizah Minhat & Nazam Dzolkarnaini & Mazni Abdullah, 2021. "The Integrity of Islamic Finance," Palgrave Studies in Impact Finance, in: Marizah Minhat & Nazam Dzolkarnaini (ed.), Ethical Discourse in Finance, chapter 0, pages 103-123, Palgrave Macmillan.
    • Handle: RePEc:pal:psifcp:978-3-030-81596-7_6
    DOI: 10.1007/978-3-030-81596-7_6
    as

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