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The Integrity of Islamic Finance

Minhat, Marizah; Dzolkarnaini, Nazam; Abdullah, Mazni


Marizah Minhat

Nazam Dzolkarnaini

Mazni Abdullah


Marizah Minhat

Nazam Dzolkarnaini


This chapter provides a critical account of popularly used Islamic financial instruments and discusses the gap between theory and practice in Islamic financial industry. The critical discussion is mainly related to financial innovations, which were derived from concepts including murabahah, ijarah and sukuk. Empirical evidence and/or real-life examples are illustrated to elucidate points. The central thesis of this chapter suggests that an ideal Islamic principle of risk-sharing has not been successfully implemented due to challenges associated with governance (or lack thereof) and behavioural factors including perverse incentives. A solution can be found through effective stakeholders’ education and activism to steer the Islamic finance industry in the right direction.

Online Publication Date Oct 26, 2021
Publication Date Oct 26, 2021
Deposit Date Oct 26, 2021
Publisher Palgrave Macmillan
Pages 103-123
Series Title Palgrave Studies in Impact Finance
Series ISSN 2662-5105
Book Title Ethical Discourse in Finance - Interdisciplinary and Diverse Perspectives
Chapter Number 6
ISBN 978-3-030-81595-0
Keywords Islamic finance; Governance; Perverse incentives; Integrity; Murabahah; Ijarah; Sukuk
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