Year: 2024
Type: article
Abstract: The Global financial crisis (GFC) or “the crisis” exposed significant weaknesses within the global financial system, largely stemming from financialization activities. This research paper explores the potential of Islamic finance (IF) principles to prevent financial crises while offering a more stable and equitable financial framework. A qualitative approach was adopted, involving interviews with various professionals in the IF field to explore the ethical and practical distinctions between conventional finance and IF. Key findings reveal the resilience of Islamic banks during the crisis can be attributed to their adherence to Shari’ah principles, which prohibit interest (riba), excessive uncertainty (gharar), and speculative activities (maysir). The study emphasizes the advantages of asset-backed financing and profit-sharing models, which align financial activities with the real economy, thereby fostering long-term stability. By highlighting the practical benefits of the ethical framework underpinning IF, this research contributes to the broader discourse on financial crisis prevention.
Authors: Halima Alisic, Betul Dinc, Anitë Salihu
Institution: Lund University
Language: English
Subfield: Accounting
Domain: Social Sciences
Open Access status: hybrid
OpenAlex ID: W4405975357