Journal of Islamic Business and Management
Remedies of the Financial Crisis: Evaluation from Islamic Finance Perspectives
Published Online: December 2011
The paper examines the adopted remedies and actions that deal with the current global financial crisis and evaluates them from the perspective of Islamic finance. For this purpose, it is divided in three sections. Section One gives a bullet points exposé of the basic axioms of Islamic finance. These are: Redefining the finance profession, finance can be provided for profit or for no-profit, Islamic finance is asset based, securities are only seen as representatives of assets, realism and the moral screen in Islamic finance. Section Two discusses the financial crisis and adopted solutions and remedies. Section Three calls for a return to the fundamentals of finance and suggests a road map for the short and long term measures to achieve this purpose. In Section Three we call to reassessing the role and function of the financial sector and suggest reform steps in the short run that consist essentially of taming speculation and eliminating virtual assets and zero sum transactions from the financial markets. And in the long run we call for a four-pillar reform which eliminates speculation and all speculative contracts, provides finance through principles and methodologies based on real ownership, creates a financial ombudsman and set stand-by financial providers.
Financial Crisis; Islamic Finance; Speculation; Zero-Sum Transactions; Virtual Assets; Mortgage-Backed Securities; Financial Ombudsman.