This book provides an overview of the practice of Islamic finance and
the historical roots that define its modes of operation. The focus of
the book is analytical and forward-looking.
It shows that Islamic
finance exists mainly as a form of rent-seeking legal-arbitrage. In
every aspect of finance - from personal loans to investment banking,
and from market structure to corporate governance - Islamic finance
aims to replicate in Islamic forms the substantive functions of
contemporary financial instruments, markets, and institutions.
attempting to replicate the substance of contemporary financial
practice using pre-modern contract forms, Islamic finance has arguably
failed to serve the objectives of Islamic law.
This book proposes
refocusing Islamic finance on substance rather than form. This approach
would entail abandoning the paradigm of ‘Islamization’ of every
It would also entail reorienting the brand-name of
Islamic finance to emphasize issues of community banking,
micro-finance, and socially responsible investment.