The Future of Conflict between Islamic and Western Financial Systems: Profit, Principle and Pragmatism
20 Pages Posted: 30 Jul 2010
Date Written: March 30, 2009
This Note offers a brief analysis of the Shari'a-Compliant financial system, its history and its emergence in the modern era, and explores areas where it has come into conflict with Western financial systems. The Note seeks to illustrate the compromises which have been necessary to allow these two systems to operate concurrently in these areas, and asserts that the compromises made by Western financial systems have been chiefly formalistic in nature, while those made by the Islamic system have been primarily from principle. Ultimately, the Note argues that the result of continuing convergence between these systems will be areas of the law which formally adhere to Shari'a requirements, but substantively and functionally most closely resemble the Western model.
Keywords: Shari'a, Finance, Riba, Ghrar, Mortgage, Murabaha
JEL Classification: F30, K00, K33
Suggested Citation: Suggested Citation