JILIL Vol 14 Issue 2 2018 - Article 1

Islamic Finance Post Financial Crisis: The New Frontier for Justifying Fundamentalism
Philip Gavin

Islamic fundamentalism claims that success can only be achieved through adherence to Islamic fundamentals. Western commentators typical analyse in relation to traditionalist Muslim ideologies rather than in connection with novel developments in Islamic regulation. One such development is the emerging industry of Islamic finance, which seeks to adhere to core Sharia principles and rejects haram aspects of secular financing. This article examines the fundamentalist claim by reference to the growing Islamic financial industry. It examines the divergences between conventional secular finance and the Islamic model, whilst assessing the extent to which these divergences are attributable to Sharia. It then examines the notion that these divergences create a divide within the financial markets mirroring Dar al-Islam (the territory of Islam) and Dar al-Harb (the territory of war). Finally, it examines the effect of the 2007-2008 financial crisis on both industries and assesses whether the lesser shocks in the Islamic industry are attributable to its rejection of haram practices.

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