Chapter

Introduction: Islamic Finance in the Global Economy

Ibrahim Warde

in Islamic Finance in the Global Economy

Published by Edinburgh University Press

Published in print February 2000 | ISBN: 9780748612161
Published online March 2012 | e-ISBN: 9780748653072 | DOI: http://dx.doi.org/10.3366/edinburgh/9780748612161.003.0001
Introduction: Islamic Finance in the Global Economy

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For years, the Islamic sector has experienced a tremendous growth and has reached a sixfold increase over the past decade. No longer confined to the outer fringes of global finance, Islamic finance has also gone mainstream. Most major financial institutions are now involved in Islamic finance, and Islamic financial institutions now operate in at least 105 countries. Within the Islamic world, Islamic financial institutions have become major economic players, with five countries dominating Islamic banking: Iran, Saudi Arabia, Malaysia, Kuwait and the United Arab Emirates. This economic boom in Islamic finance is due to a number of interrelated demographic, political, economic and financial factors. Initially scarce, Islamic financial products have multiplied over the past years, attracting new clientele – even those who had initially ignored the Islamic markets. Especially notable is the appearance and the popularity of sukuk or Islamic bonds, which skyrocketed the market to $100 billion. Islamic banking has long been criticised for being overly conservative when it comes to financial innovation, but is still work in progress. This book aims to understand the current state of the Islamic sector by tracing its evolution through three distinct phases: the early years (1975 to 91); the era of globalisation (1991 to 2001); and the post-September 11, 2001 period. The first part provides background information on Islam and finance (Chapters 1 to 3). It debunks common myths about Islam and Islamic finance, traces the historical evolution of Islamic economics and finance – as well as the mechanisms by which Homo Islamicus and Homo Economicus were reconciled – and considers religious injunctions as they pertain to finance. The second part of the book introduces and describes the world of Islamic finance (Chapters 4 to 7). It outlines the birth and evolution of modern Islamic finance through the three phases described earlier, and places Islamic finance in its proper political and economic context. The third part (Chapters 8 to 12) deals with the issues and challenges facing Islam from different vantage points.

Keywords: Islamic sector; global finance; Islamic finance; Iran; Saudi Arabia; Malaysia; Kuwait; United Arab Emirates

Chapter.  2687 words. 

Subjects: Society and Culture

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