Islamic Economics: New Economic Paradigm, or Political Agenda?
DOI:
https://doi.org/10.62374/ys4x0196Keywords:
Islamic banking, legalistic approach, diverse doctrine, prohibition of interest, Shari’a-compliant, disguised interestAbstract
The concept of Islamic economics emerged during the decolonization process in Muslim countries. Its creators sought a new economic paradigm reshaped along Islamic principles in an attempt to clearly distance the newly independent countries from their colonial legacy. The whole concept was strongly politically motivated since its very creation and this legacy has never been overcome. This paper outlines the ideological foundations of Islamic economics and its underlying theoretical principles focusing on Islamic banking, undoubtedly the most developed segment of Islamic economics. The empirical analysis of Islamic banking across Muslim countries in the last decade, however, reveals a major general discrepancy between the claims and the reality as well as some interesting regional differences. It turns out Islamic banking does not stand up to its own claims and even more so in those countries where Islamization of economy was imposed by the government. The reasons behind such discrepancy are identified, and influence of political agenda on Islamic finance is suggested as the driver behind the whole concept.
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