Islamic finance: is it about how fast to get there?

Minhat, Marizah; Dzolkarnaini, Nazam

Abstract

In this article, we call for the sincerity and honesty of Islamic finance academics in disseminating knowledge about the real state of the Islamic finance industry. Uncomfortable truths about Islamic finance as practised, if left unspoken, could result in students being misled, which might in turn deter efforts to improve the existing weaknesses of the industry. How can we improve the current situation if we do not first admit the present weaknesses? One should not find it difficult to admit an uncomfortable truth if one can rationally accept the notion of continuous learning and improvement.

We suggest for Islamic finance academics to link their classrooms' discussions of Islamic financial instruments to a ‘substance over form’ concept. For example, the economic reality of sukuk as practised today should not be omitted in the discussion of sukuk instruments. This includes a critical discussion on sukuk as a possible replication of straightforward debt financing.

There is a clear obligation on every Muslim to speak the truth, and those teaching Islamic finance are no exception. This obligation is expressed clearly in the Quran: ‘And do not overlay the truth with falsehood, and do not knowingly suppress the truth’ (Al-Baqarah, 42). It is important that in our enthusiasm and, perhaps, rush to promote Islamic finance and banking, we should try our best to be more careful about not promoting facades. It is not just unethical, but a sinful strategy to conceal the truth, especially for the sake of a profitmaking agenda that serves private interests at the ignorance of others. It is not so much about reputational risk being at stake, it is the fact that we are answerable and accountable in the life hereafter for the things we preach in the present life.

There may have been an ‘impatience to sell’ in the Islamic finance industry. However, the real Islamic finance agenda should be more noble than achieving higher returns for investors. This should pose a great challenge to Islamic finance academics and practitioners to think harder and invest more time in devising a more appropriate strategy to help the Islamic finance industry to grow in the right way. Being the first there does not guarantee that one has done the right thing.

The full article can be viewed at this link: https://issuu.com/islamicfinancereview-isfire/docs/december_issue

• Journal Article Type: Article
• Publication Date: Dec 10, 2015
• Deposit Date: Apr 18, 2019
• Journal: Islamic Finance Review
• Print ISSN: 2049-1905
• Publisher: Edbiz Consulting Limited
• Peer Reviewed: Not Peer Reviewed
• Volume: 5
• Issue: 4
• Pages: 64-67
• Keywords: Islamic finance, ethical finance, education
• Public URL: http://researchrepository.napier.ac.uk/Output/1738686