Thesis or dissertation
Date of this Version
Islamic Finance is more than an asset class – it is a way of life lived by 1.6 billion Muslims around the world. But its reach goes even further – non-Islamic countries, governments, and businesses, have all invested in or issued Islamic securities for one reason or another. With the ongoing push of globalization of trade and finance, Islamic financial flows, long a localized phenomenon, have become international.
The rise of Islamic Finance transactions between the Islamic and Non-Islamic worlds has led to peace between civilizations and war within civilizations. The Islamic and Non-Islamic world are becoming increasingly interdependent and reliant, while within these worlds intense competition and infighting is ensuing – so-called "internecine fights" – in order to see who can be the friendliest to the alien culture while somewhat staying true to their own.
Islam has never been particularly united, with Islamic jurisdictions disagreeing and sometimes downright contradicting each other interpreting the same verses of the Quran, but the strains are becoming particularly visible as international flows of money get increasingly diverted to Islamic investments and securities. Islamic Finance is unavoidably prone to conflict. In the non-Islamic world, the appearance of such an abundance of foreign wealth seeking a home has led to an intense competition to play host – with countries slashing tax rates and courting investors in a beggar-thy-neighbor race.
This paper examines the rise of International Islamic Finance and discusses how conventional Islamic finance theory is ill-suited to the realities of the global Islamic landscape. Specifically, there is not enough attention paid to the possible areas of conflict that arise in interpretations of Islamic law that pertain to financial transactions. It then looks at examples of how practical issues in Islamic Finance are exposing conflict areas between Islamic and non-Islamic players, but perversely, is building cooperation and understanding between the worlds.
Date Posted: 09 July 2015