WRONGS TO RIGHTS: The Global Financial Crisis Offers an Opportunity to Lay the Foundation for an Equitable and Sustainable Economic and Social Order

Islamic Horizons, pp. 22-24, March/April 2009

3 Pages Posted: 24 May 2009 Last revised: 20 Feb 2018

See all articles by Ehsan H. Feroz

Ehsan H. Feroz

University of Washington, Milgard School of Business-Accounting ; University of Illinois at Urbana-Champaign; Government of the United States of America - US GAO Advisory Council; University of Minnesota, Labovitz School of Business-Department of Accounting; University of Minnesota, Carlson School of Management-Department of Accounting; American Accounting Association

Date Written: May 23, 2009

Abstract

Although economists have documented many anomalies in the behavior of both national and global markets, no attempt has been made so far to fundamentally restructure the global financial system so that it would be equitable and just to both the producers and consumers. This paper follows upon the recent call of the Vatican to explore the Shariah based financial system as an alternative to the current riba (usury) based system that has dominated the world ever since goldsmiths discovered the 'fractional reserve banking' as an excellent way of making money. It highlights the fundamental weaknesses and the contradictions of the current riba (usury) based system as compared to the Shariah based system. It offers a tentative road map out of the current financial crisis.

Keywords: Islamic economics, Islamic finance, Usury, Fractional reserve banking, Agency theory, Animal spirits, Political Economy

JEL Classification: F02, G21, G28, H74

Suggested Citation

Feroz, Ehsan H., WRONGS TO RIGHTS: The Global Financial Crisis Offers an Opportunity to Lay the Foundation for an Equitable and Sustainable Economic and Social Order (May 23, 2009). Islamic Horizons, pp. 22-24, March/April 2009, Available at SSRN: https://ssrn.com/abstract=1409140

Ehsan H. Feroz (Contact Author)

University of Washington, Milgard School of Business-Accounting ( email )

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University of Minnesota, Carlson School of Management-Department of Accounting ( email )

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American Accounting Association ( email )

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