Global Financial Crisis and the Link Between the Monetary and Real Sector: Moving Beyond the Asset-Backed Islamic Finance
Mohammad Omar Farooq
September 1, 2009
Proceeding of the 20th Annual Islamic Banking Seminar, September 2009
A major factor behind this crisis is financialization of the system, with a growing disconnect between the monetary and the real sector. Some proponents of the Islamic finance claim such financial crisis would have been avoided, if asset-backed Islamic finance were adopted. However, while Islamic finance in form and legality is asset-backed at the micro-juristic level, it is still largely delinked from real sector at the macro level. This paper articulates the need for Islamic finance to be better embedded in the reality of the real sector and be more effective to achieve the broader economic goals that it proclaims to pursue.
Number of Pages in PDF File: 12
Keywords: Islam, Islamic economics, Islamic finance, Islamic banking, financial crisis, global financial crisis, asset-backed, Usmani, real sector, monetary sector, financialization, maqasid
JEL Classification: E30, E40, E44, E50, E60, N10, O10, P19Accepted Paper Series
Date posted: November 26, 2009 ; Last revised: January 27, 2010
© 2014 Social Science Electronic Publishing, Inc. All Rights Reserved.
This page was processed by apollo5 in 0.266 seconds