The Response of Islamic Financial Service to the COVID-19 Pandemic: The Open Social Innovation of the Financial System

Abstract

Novel Coronavirus, also known as COVID-19, is a health emergency that is having an ever-growing impact on the global economy. COVID-19 has caused economic disruption at an unprecedented speed and scale. The economic costs it will bring to society can only be measured in times to come. Millions of people across the globe have already become unemployed, and similarly, millions of businesses have either shut down or are on the verge of collapse. It is a great challenge for policymakers to minimize the economic impact of COVID-19 and put the economy on a growth trajectory once again. Unfortunately, there is so far no country in the world that can be viewed as a role model for its economic response to the COVID-19 pandemic. The present study proposes Islamic finance as a potential tool to help affected economies safely pass through the economic crisis resulting from the pandemic. This study identifies a four-stage COVID-19 model and proposes ten innovative Islamic financial services for each stage of the pandemic. In addition, it analyzes how these services can be effectively utilized at different stages to overcome the economic damage caused by the pandemic.