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Has Islamic finance contributed to the public good?
User ID: 1124828
03/20/2011 04:39 PM
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OXFORD: In the aftermath of the global financial crisis, one of the major criticisms has been the disconnection between banking and the real economy. One perceived manifestation is the single-minded pursuit of shareholder value and individual enrichment driven by a culture of wanton greed, instead of the traditional function of banking as financing entrepreneurial projects for the good of the real economy.
At the stately surroundings of Ditchley House in Oxford in England last week, the Securities Commission of Malaysia (SC), the securities regulator and the Oxford Centre for Islamic Studies (OCIS), organized a timely roundtable on “Islamic Finance and the Public Good,” which given the faith ethos of Islamic finance should be a common feature on the conference circuit purporting to serve the industry instead of the gratuitous marketing platforms which they often offer in return for sponsorship.
In his special address, Raja Nazrin Shah, the crown prince of Perak State in Malaysia and ambassador-at-large of the Malaysia International Islamic Financial Centre (MIFC), reminded that in Islamic finance, consideration of the public good is inherent in the Maqasid Shariah (the objectives of the Shariah). “The Shariah seeks to establish justice, eliminate prejudice and alleviate hardship. The prohibition of riba (interest), for instance, serves to ensure that Islamic financial transactions promote real, as opposed to artificial, wealth creation. Therefore, it serves the public good. On the other hand, the artificial creation and transfer of wealth through so-called ‘toxic products’ do not serve the public good. Such activity can have catastrophic consequences as demonstrated during the financial crisis,” he explained.
The concept of Maslaha (the public good) is another testament of the close link between Islamic finance, fiqh (jurisprudence) and the public good, and partly based on the saying of the Prophet Muhammad (peace be upon him) that “no harm should be caused to another nor shall any harm be caused in return for harm.”
[link to arabnews.com]
The Western Bankers won't like this....