Islamic Finance’s Search for Meaning

Abstract

Islamic finance industry since its inception has faced a dilemma that has persisted in spite of its significant increase in market share and tremendous growth. The similarity that it has with the conventional finance industry makes many of the participants very unconformable. Behind this criticism are many embedded assumptions. One of it is that Islamic finance in its current form may not be ‘Islamic’: As if this line of the thinking opens the door for an existential crisis. In this paper we discuss the existential crisis of Islamic finance and explain the different ways it continues to deal with it and provide meaning to the industry and academia. Firstly, we offer a historical perspective on Islamic finance and how the first generation of Islamic finance scholars conceived the problem. Then we discuss the different ways the Islamic finance scholars continue to explain the meaning that Islamic finance contains. Here the focus particularly would be on the deontological nature of Islamic ethics and the importance of risk sharing instruments. The success of the Islamic finance industry in terms of its profitability and the opportunity it holds as a possible provider of meaning are presented. Finally, we focus on the role of the actor as not simply a receiver of meaning but as the creator of meaning.