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The Role of Islamic Finance in Achieving Sustainable Development Goals (SDGs)

In: Islamic Finance and Sustainable Development

Author

Listed:
  • Mohamad Akram Laldin

    (International Shari’ah Research Academy for Islamic Finance (ISRA), INCEIF University)

  • Fares Djafri

    (International Shari’ah Research Academy for Islamic Finance (ISRA), INCEIF University)

Abstract

Islamic finance has a lot in common with impact investment and can play a major role in addressing the problem faced by society. It also has the potential to bring add value to the efforts to mobilize resources for the sake of realizing the SDGs. This study adopts a qualitative method of inquiry and utilizes the inductive method and content analysis to explore the potential for Islamic finance to play a key role in supporting the Sustainable Development Goals (SDGs). The study found that Islamic finance can play a major role in addressing the problem faced by society and has the potential to contribute to the achievement of the SDGs through creative and productive modes of financing. Equally important, unlocking the potentials of Islamic social finance instruments such as waqf, zakat, and sadaqah will improve financial inclusion, financial sector stability and ultimately, enhance the contributions of Islamic finance to the SDGs. Besides, the integration of waqf and zakat with the financial sector can play a major role in realizing the SGDs such as reducing the vulnerability of the poor. The study also found that the maqasid discussion in the financial sphere should be extended to integrate various sustainable development instruments such as SRI, ESG, and VBI. The integration between SDGs and Maqasid al-Shariah should also be considered to overcome the challenges faced by the Islamic finance industry in implementing SDGs.

Suggested Citation

  • Mohamad Akram Laldin & Fares Djafri, 2021. "The Role of Islamic Finance in Achieving Sustainable Development Goals (SDGs)," Springer Books, in: M. Kabir Hassan & Mehmet Saraç & Ashraf Khan (ed.), Islamic Finance and Sustainable Development, chapter 0, pages 107-126, Springer.
    • Handle: RePEc:spr:sprchp:978-3-030-76016-8_6
    DOI: 10.1007/978-3-030-76016-8_6
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