Editorial

Abstract

In the name of Allah, Most Gracious, Most Merciful. It has become an undeniable fact that Islamic finance is here to stay. The industry is already making its mark in the global financial sphere as a viable alternative to conventional finance. The International Monetary Fund recently expressed proactive support for the promotion of financial stability in countries with Islamic banking; meanwhile, the World Bank Group also expressed interest in leveraging on Islamic finance for economic development in Muslim countries. These global initiatives indicate that the potential of Islamic finance is receiving more and more recognition day by day. On the other hand, the expectations of the masses from Islamic finance are rising as well. People would like to know what Islamic finance can offer them beyond a commercially viable solution. As the ethical and social aspects of finance have been severely questioned in the post-crisis era, people expect Islamic finance to answer the need of the hour.

Islamic teachings consist of the best moral and ethical practices. By virtue of the same, Islamic finance is expected to represent an intrinsically socially responsible and ethical way of finance. It should not only address but also promote the best environmental, social and governance practices. Recognising its role and responsibility in this regard, the Islamic finance industry should move at a faster pace toward ethical and socially responsible finance. For all the participants in the industry, it is high time for a paradigm shift to elevate Islamic finance from the mere level of permissibility/impermissibility (ḥalāl/ḥarām) to the level of permissible and good (ḥalāl and tayyib). In that paradigm, it would more actively seek to achieve common welfare (falāḥ) and public good (maṣlaḥah). The industry will achieve more if it positions itself to endorse ethical, social, environmental, sustainable and good governance dimensions in its practice.

DOI: https://doi.org/10.1108/IJIF-07-2017-001