This book argues that the macroeconomic policy adjustment models recommended by the IMF and the World Bank for implementation in many Muslim countries, with substantial donor financial support, have not been effective. Economic indicators show low economic growth, persistent fiscal and external deficits and limited industrialization. Also, these countries are experiencing increases in unemployment, poverty and substantial growth in income and wealth inequalities. These facts underline an urgent need to produce an alternative to the failed conventional macroeconomic model in order to address the challenge of macroeconomic and social adjustment policies. The project posits and investigates the idea that the Islamic economic model prescribed in the Quran and applied by the Prophet (sawa) could be the ideal model for Muslim as well as non-Muslim countries.
Islamic finance has started to grow in international finance across the globe, with some concentration in few countries. Nearly 20 percent annual growth of Islamic finance in recent years seems to point to its resilience and broad appeal, partly owing to principles that govern Islamic financial activities, including equity, participation, and ownership. In theory, Islamic finance is resilient to shocks because of its emphasis on risk sharing, limits on excessive risk taking, and strong link to real activities. Empirical evidence on the stability of Islamic banks, however, is so far mixed. While these banks face similar risks as conventional banks do, they are also exposed to idiosyncratic risks, necessitating a tailoring of current risk management practices. The macroeconomic policy implications of the rapid expansion of Islamic finance are far reaching and need careful considerations.
Islam proposes the replacement of an interest-based financial system with one which operates on the basis of risk and profit sharing. Using a general equilibrium model, this paper investigates some open-economy implications of the adoption of Islamic banking for growth and stabilization of the economy. It analyzes the long-run effects of Islamic banking on international capital flows and on the economy’s capacity to adjust to disturbances. It concludes that monetary policy can be used effectively for stabilization purposes and that disturbances to asset positions are absorbed efficiently in an Islamic financial system.
This handbook offers a unique and original collection of analytical studies in Islamic economics and finance, and constitutes a humble addition to the literature on new economic thinking and global finance. The growing risks stemming from higher debt, slower growth, and limited room for policy maneuver raise concerns about the ability and propensity of modern economies to find effective solutions to chronic problems. It is important to understand the structural roots of inherent imbalance, persistence-in-error patterns, policy and governance failures, as well as moral and ethical failures. Admittedly, finance and economics have their own failures, with abstract theory bearing little relation with the real economy, uncertainties and vicissitudes of economic life. Economic research has certainly become more empirical despite, or perhaps because of, the lack of guidance from theory. The analytics of Islamic economics and finance may not differ from standard frameworks, methods, and techniques used in conventional economics, but may offer new perspectives on the making of financial crises, nature of credit cycles, roots of financial system instability, and determinants of income disparities. The focus is placed on the logical coherence of Islamic economics and finance, properties of Islamic capital markets, workings of Islamic banking, pricing of Islamic financial instruments, and limits of debt financing, fiscal stimulus and conventional monetary policies, inter alia. Readers with investment, regulatory, and academic interests will find the body of analytical evidence to span many areas of economic inquiry, refuting thereby the false argument that given its religious tenets, Islamic economics is intrinsically narrative, descriptive and not amenable to testable implications. Thus, the handbook may contribute toward a redefinition of a dismal science in search for an elusive balance between rationality, ethics and morality, and toward a remodeling of economies based on risk sharing and prosperity for all humanity
This book provides a knowledge base of the existing indigenous and local water knowledge, values, and practices, and how this water knowledge can be mainstreamed into the decision-making process. The book not only demonstrates the perks of using indigenous knowledge but also illustrates the barriers and gaps that should be considered while planning for mainstreaming traditional knowledge and values at a local scale. The chapters incorporate case studies from various parts of the world demonstrating how indigenous, and religious and cultural values of water have translated into water use and conservation behavior among indigenous people ensuring resource sustainability over a long period of time. There has been global attention towards combining indigenous and local knowledge with new information and innovation to attain future water security. In this regard, this book is timely, relevant, and significant as it is the first attempt, as per the best of our knowledge, to publish a book that solely addresses indigenous and local knowledge, values, and practices regarding water management, quality monitoring, use, and conservation. With increasing emphasis on the inclusion of indigenous and local knowledge into natural resource governance and conservation by international agencies like the Intergovernmental Science-Policy Platform on Biodiversity and Ecosystem Services (IPBES), the proposed book will significantly contribute to the existing knowledge base and demonstrate the importance of mainstreaming indigenous water knowledge and practices into water governance and decision making. The UN SDGs, recognizing the significance of indigenous knowledge systems, emphasized its inclusion in most aspects and principles of SDGs. Apart from direct links with SDGs like zero hunger (SDG 2), no poverty (SDG 1), and climate action (SDG 13), indigenous and local knowledge system is considered to be directly connected to clean water and sanitation (SDG 6). The book will be useful to researchers and students in the field of indigenous knowledge and education, water governance, community-level planning, and water sustainability. The book can be referred to for postgraduate courses and beyond, as well as policymakers, conservationists, non-governmental organizations, development practitioners, and local government officials.
This book argues that the macroeconomic policy adjustment models recommended by the IMF and the World Bank for implementation in many Muslim countries, with substantial donor financial support, have not been effective. Economic indicators show low economic growth, persistent fiscal and external deficits and limited industrialization. Also, these countries are experiencing increases in unemployment, poverty and substantial growth in income and wealth inequalities. These facts underline an urgent need to produce an alternative to the failed conventional macroeconomic model in order to address the challenge of macroeconomic and social adjustment policies. The project posits and investigates the idea that the Islamic economic model prescribed in the Quran and applied by the Prophet (sawa) could be the ideal model for Muslim as well as non-Muslim countries.
Although Islamic finance is one of the fastest growing segments of emerging global financial markets, its concepts are not fully exploited especially in the areas of economic development, inclusion, access to finance, and public policy. This volume is to improve understanding of the perspective of Islamic finance on economic development, social and economic justice, human welfare, and economic growth.
The paper analyzes the bearing of Islamic teachings on the conduct of fiscal policy. It is shown that Islamic teachings do not prescribe any rigid system of public finance. The major emphasis is on the state’s responsibility to assure at least a basic minimum standard of living for all citizens. The paper deals with issues related to evolution of fiscal policies best suited to achieve this and other Islamic socio-economic objectives in the specific framework of Islamic teachings. The implications of such a system for growth, monetary stability, resource allocation, and pattern of income distribution are also examined.
Muslim countries are facing serious problems in managing their economic life. Their inherited colonial ways of achieving economic aims are in basic contradiction to certain aspects of Islamic values and intended economic goals. Thus, it is imperative for Muslim countries endeavoring to escape underdevelopment and social injustice to turn to Islamic teaching and the Islamic way of harnessing human potentials to improve economic conditions and ascertain the necessary requirement for effective economic development.Islamic economics, as developed by Muslim jurists and social scientists (fuqaha'), needs to be recast in modern terms and developed further to deal with complex realities of the modern society. This book is one step on the long march to Islamizing the science of economics. It contains a selection of papers from the proceedings of the economic conference held in Cairo in 1988. These papers are a valuable contribution to the cause of modernizing Islamic economics.
