Islamic finance: the convergence of faith, capital, and power

Thesis

This dissertation assesses how Islamic finance fares as an example of ‘civil compromise’ in Islamic law. By focusing on the Islamic project finance sector, my research examines how the industry’s main stakeholders (representing faith, capital, and power) cooperate and compete to bring about this compromise through the ‘Game of Islamic Bank Bargains’.

The Islamic finance industry is a work in progress, and while it has made some significant strides, it is still a niche in the global conventional financial order rather than an alternative to it. It has fallen short of fulfilling its originally-stated social justice aspirations, but has provided a previously unavailable form of banking and finance for Muslims to transact, at least formalistically, in accordance with widely-believed tenets of their faith. Thus, those who hold up Islamic finance as a universal panacea or dismiss it outright as a fraud have both got it wrong. It is neither. It is, rather, a complex myriad of incentives and aspirations of a multitude of stakeholders muddled together across numerous geographies and evolving incrementally and constantly. 

The state of the industry is the result of how the stakeholders (the shariah scholars, lawyers, bankers, government officials, and customers) have pursued their self-interest in the Game of Islamic Bank Bargains. My research examines who are the ‘winners’ and ‘losers’ of this game, and what religious, commercial, and political factors have influenced this outcome. I assess what may incentivise the incumbent ‘winners’ to guide the Islamic finance industry away from a formal and legalistic approach towards one that also incorporates principles from Islamic economics. I explore how the ‘losers’—whose interests are not accounted for due to their lack of sufficient financial and political clout—can sway the outcome of the game in their favour.

Authors: Khoshroo, S

• DOI: 10.5287/ora-n1ekvqb57
• Type of award: DPhil
• Level of award: Doctoral
• Awarding institution: University of Oxford
• Language: English
• Keywords: Shariah finance; Islamic bankers; Shariah scholars; Civil Compromise; Islamic banking and finance
• Subjects: Banks and banking--Religious aspects--Islam; Banks and banking--Moral and ethical aspects; Economies of Muslim countries; Political-economy of the Muslim world; Finance (Islamic law); Socio-legal studies