Moving Forward Islamic Finance: A Reflection on the Approach and Direction

By Hafas Furqani, Zaki Fuad Khalil & Abdul Hamid

Abstract

The immense development of Islamic banking and finance in the last three decades has moved the industry into global integration in the international financial market. From a local system of finance with limited assets and market shares, Islamic banking and finance now emerges as a multinational industry. The people of the world do not only welcome Islamic banking and finance, but also put their hopes that it can provide alternatives to the mainstream financial practices and also provide solutions to the problems and crisis which regularly occur in that system. While the outlook seems to be very positive, some, however, question whether the development is moving on the right track to realise the hopes pinned on it at the time of its initial establishment. Whether Islamic finance really provides alternative to the conventional finance paradigm and whether the approach taken in developing Islamic finance is appropriate are the questions that emerge currently. There is a wide expectation that Islamic banking and finance is able to provide the guidelines for managing a good economy, stimulating growth and development, realising socio-economic justice and promoting employment and stability. Islamic banking and finance therefore should not limit itself to merely offering economic and financial practices that satisfy the minimum standard of legal requirements.