ISLAMIC PERSPECTIVES ON THE CONVENTIONAL WORLD ECONOMIC CRISIS

THE CURRENT FINANCIAL CRISIS EMANATING FROM THE FAILURE OF THE CONVENTIONAL ECONOMIC/FINANCIAL SYSTEM HAS CAUSED GREAT DAMAGE TO MANY ECONOMIES. WOULD AN ISLAMIC ALTERNATIVE BE BETTER?

(Author : Muhammad Zahid Abdul Aziz, Director, Muamalah Financial Consulting Sdn Bhd - February 11 2010.

(A term paper for Islamic Economics Msc Islamic Banking & Finance IIUM)

Abstract

The paper will argue that the Western originated subprime crisis is a crisis that emanates from the fundamental flaws in the conventional system. Western analysts writing on it are still missing the point; they do not address the issue of the world view. They do not know what they do not know. Application of the Islamic world view and the resultant Islamic system will heal all the pains. However it’s a gigantic task to get the world to listen and appreciate the Islamic world view. A journey of a thousand miles begin with the first steps.

As far as Sukuk is concerned, the Islamic Financiers will inherit the Western ills for so long as they do not move away from debt Sukuk and focus on the more Shariah compliant equity Sukuk. Sukuk with equity names but decidedly debt features pleases the Sukuk players but contributes naught or little to the achievement of Maqasid AlShariah in Islamic Finance.