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Islamic Banking and Financial CrisisReputation, Stability and Risks$
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Habib Ahmed, Mehmet Asutay, and Rodney Wilson

Print publication date: 2013

Print ISBN-13: 9780748647613

Published to Edinburgh Scholarship Online: May 2014

DOI: 10.3366/edinburgh/9780748647613.001.0001

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PRINTED FROM EDINBURGH SCHOLARSHIP ONLINE (www.edinburgh.universitypressscholarship.com). (c) Copyright Edinburgh University Press, 2020. All Rights Reserved. An individual user may print out a PDF of a single chapter of a monograph in ESO for personal use.date: 29 March 2020

Reshaping the Islamic Finance Industry: Applying the Lessons Learned from the Global Financial Crisis

Reshaping the Islamic Finance Industry: Applying the Lessons Learned from the Global Financial Crisis

Chapter:
(p.21) 2 Reshaping the Islamic Finance Industry: Applying the Lessons Learned from the Global Financial Crisis
Source:
Islamic Banking and Financial Crisis
Author(s):

Rafe Haneef

Edib Smolo

Publisher:
Edinburgh University Press
DOI:10.3366/edinburgh/9780748647613.003.0002

This chapter examines the lessons learned from the global financial crisis of 2008 and how they can be applied to reshape the Islamic financial industry. It analyses some of the significant flaws in the current international financial system, with emphasis on how risk transfers result in irrational economic growth and banks’ excessive lending. It considers the inadequate risk management procedures of many financial institutions selling conventional financial products, along with transparency and disclosure issues. It also favours a shift to equity-based finance, which is more compatible with Islamic financial principles.

Keywords:   financial crisis, financial industry, risk transfers, banks, lending, risk management, financial institutions, transparency, disclosure, equity-based finance

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