Cultural Financial Traditions and Universal Ethics: the Case of Hawala

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.