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Revisiting the Ethical Foundations of Islamic Finance: A Comparison with Conventional Finance - Jointly organized with the International Political Economy Research Cluster (Warwick)

Speaker: Dr Jikon Lai (University of Melbourne)

Monday 1 July 2013, 2pm - 4pm, Venue: S2.81, The University of Warwick

Seminar, open to staff, PhD students and MA students. More info: Dr Chris Clarke (Warwick)

Abstract from the author:

"The global growth of Islamic finance in recent years has undoubtedly been a spectacular development in the global financial market, and yet despite this success, Islamic finance has been criticised for not having in practice offered financial products that truly differed from those in the ‘conventional’ sector. On the contrary, many practitioners, academics and religious experts have argued that Islamic financial products, as they are currently constituted, only differ in form but not in substance from ‘conventional’ ones. In particular, many point out that the principles of risk sharing, the prohibition against the payment of interest, and the requirement for transactions to be grounded in ‘real’ economic activity are circumvented through the forms of Islamic financial products that have been introduced in the market.

In this paper, I revisit this debate on the ‘authenticity’ of Islamic finance and turn it on its head. First, I argue that the focus on differentiating Islamic and conventional finance has exaggerated their differences. Instead, I demonstrate that there is greater similarity and overlap in the ethical origins of Islamic and conventional finance than has hitherto been acknowledged, and that it is in fact conventional finance that has most ‘strayed’ from its roots. Given the common ethical roots, one should not be surprised to find commonality in the forms of financial products between Islamic and conventional finance. Second, despite the appearance of similarities, I suggest that there is nevertheless a substantive ethical dimension in the manifestation and practices of Islamic finance today that differentiates it materially from conventional finance."

Seminar, open to staff, PhD students and MA students. More info: Dr Chris Clarke (Warwick)