The financial Tower of Babel: roots of crisis

Abstract

PurposeThe aim of this paper is to explore and discuss the causative factors of the current financial crisis from an Islamic perspective. This paper also examines Islamic finance as an alternative financial system and a potential long‐term solution to financial instability.Design/methodology/approachThe paper provides descriptive, analytical and comparative analyses.FindingsThe paper offers insights into the causes of the current international financial crisis. It highlights an alternative and a solution to this dilemma in the form of Islamic finance and stresses the stability of the Islamic finance system.Practical implicationsThe findings presented in this paper can be used by policy makers, regulators and practitioners in both the Islamic and conventional financial sector as they provides insights into factors that can insulate the market from future crisis. However, to expect a wholesale transformation to an Islamic financial system is idealistic.Originality/valueThis paper contributes to the understanding of Islamic finance principles and its value as a solution to the current and any future financial crises. A highly original conceptual idea is used in the metaphorical comparison to the Tower of Babel. The findings of this research will be of interest to western and Islamic financial practitioners, policy makers and academicians.