Islamic Banking Addressing the Issue of System Viability

1、islamic banking : addressing the issue of system viabilityinstitute of arab and islamic studies university of exeterexeter, united kingdomsubmitted by robin ben-salahuddin, to the university of exeter as a dissertation for the degree of master of philosophy in arab and islamic studies, may 2005.this

2、 dissertation is available for library use on the understanding that it is copyright material and that no quotation from the dissertation may be published without proper acknowledgement.i certify that all material in this dissertation which is not my own work has been identified and that no material

3、 has previously been submitted and approved for the award of a degree by this or any other university.robin ben-salahuddinacknowledgementsmy greatest thanks, and most heartfelt submission of body-mind -spirit consciousness goes to the infinite spirit, the all in all, my ultimate guide; and to my anc

4、estors, known and unknown, for their many sacrifices, which makes my lifes journey and this project possible and meaningful. i pray that i have represented well the quality of my proposition. also, i would very much like to thank professor richard adelstein, of wesleyan university usa, and eddie ade

5、 knowles, ph.d., of rensselaer polytechnic institute usa, for their sensitivity, friendship, and personal guidance throughout the years, as well as for their unshakable confidence in my abilities. very special thanks to dr. youssef choueiri, my supervisor, for his guidance, and consistent understand

6、ing and patience, which has been tested throughout the duration of the production of this work. and to note, that the seminal query from which this thesis project has evolved originated with him.thanks to saer maty ba, ph.d. candidate at university of exeter, for his invaluable assistance in the tim

7、ely location and acquisition of significant research material from overseas. to dr. michael jones, of killeen, texas, usa, for his many kindnesses extended to me in order that i might bring this journey to a successful and timely conclusion. finally, my warmest embraces, hugs, kisses, and undying lo

8、ve to my niece, imani salahuddin for her critical technical assistance in the physical production of this thesis; and to kamilah salahuddin, once again, for her patience in awaiting her fathers completion of another long-term project. abstractthe basic premise and ultimate purpose of this thesis is

9、to show reasonable proof that islamic banking is theoretically sound, and is, despite certain discernable flaws in its contemporary applications, a viable, working system overall. by viable, it is meant by definition that islamic banking is a vital, financially sustainable enterprise in the modern r

10、eal world context. the methodology employed towards proving the efficacy of this distinctive religiously based system of finance, flows from the intuition that developing an intimate and comprehensive understanding of the various components from which the practice of islam and islamic banking has hi

11、storically evolved, is a necessary and inseparable precondition to being able to address the issue of viability; an issue, the ultimate real time assessment of which it is also contended, must be left to the final portion of the thesis. towards this end, the present study ensues a constructive disco

12、urse of six chapters, with each chapter necessarily attending to a discrete, intelligible, analytical objective; yet is interconnected to the ultimate objective in that in due course, each piece incrementally and singularly contributes towards developing the requisite knowledge referred to above as

13、being critical in order to make a determinative evaluation on the issue of viability. thus, the stages of informational development toward this evaluative ability follow the course initiated by a required investigation of (1) the historical purports, intellectual dynamics and restrictive frontiers o

14、f traditional paradigms; (2) the challenge of modernity that presently confronts the islamic historical identity; (3) how that challenge facilitated the drive towards arriving at the theoretical underpinnings of a modern islamic economic infrastructure; (4) how from that islamic economic infrastruct

15、ure the challenge of islamic banking was effectuated; and (5) an attempt to evaluate islamic banking in its real time context. the information obtained was procured predominantly from written materials of those who in many cases are considered to be experts, pioneers, and/or advocates of what is int

16、ended to unfold with this newly developing system. in addition, the author attended a number of islamic conferences and seminars, affording a first hand opportunity to meet, study, and discuss, with those engaged in the blossoming world of the subject matter being investigated, inclusive of listenin

17、g to and making the acquaintance of some of the leading proponents of islamic economics and islamic banking quoted in my thesis.for a variety of reasons, in our modern day context, even the thought of an islamically based banking system, originating from an indigenous series of economic propositions

18、 which in turn ultimately derive from basic and simple religious tenets, is almost literally unheard of. while this may understandably be true for a majority of non-muslims, it arguably remains true as well for a significant portion of practicing muslims. thus arguably as well, a secondarily suggest

19、ive focus and challenge would be to determine whether such a system, borne of a distinctive religious culture, and originally intended to accommodate the needs of a singular religious population, can reasonably be expected to have any practical attraction to a wider variety of participants in and of

20、 the western world, based as that world is, in its own economic and banking traditions; one which, with all its problems, still dominates the world today. here it will be argued that certain realities within the conventional banking regime have contributed towards facilitating the entry of islamic b

21、anking, and in the process, have suggested the ethical and practical application of the islamic banking approach to non-muslims. as well, regarding methodology, i attended a number of islamic economic conferences and seminars, affording myself the opportunity to meet, study and pray with those engag

22、ed in the blossoming world of this and like subject matter, inclusive of listening to and making the acquaintance of some of the leading proponents of islamic economics and banking quoted in my paper.in the end, it was a matter of combining left and right brain approaches, that is, rigourous, discip

23、lined study and analysis, coupled with consistent meditations upon the matters concerned, which brought about this presentation, both in style and substance. literature reviewas with any journey towards substantive realization through research, the materials used in the production of this paper have

24、 proven inspiring, provocative, subtle, complex, and contradictory; but always, insightful, enlightening, and ultimately liberating.this literature review is presented as a summary of the significance of the literature used, those cited and not cited, in that i will attempt to place into context the

25、 type of literature relied upon for the purposes to which the chapters were devoted.the first chapter is, above all, devoted to developing an understanding of the nature and limitations of paradigms. that is, it probes the issue as to their genesis, significance, and usefulness; and in what ways the

26、y influence our perceptions and misperceptions of who we are, who we think we are, and what we think of “others,” and how they determine our reflexive response to the things outside our physical bodies and mental grasp. in short, it is about the power of knowledge, a particular history of its develo

27、pment, use and misuse; and of the always attendant responsibility that such knowledge and power bring, or cause us to bring, down upon ourselves, as is reflected in the aperture or closure of our minds. ultimately it aspires to serve as an instrument of invocation to the reader to exercise and/or ma

28、intain an open mind regarding the presentation of a variety of related subject matters where in many cases, its paradigmatic reputation, for better or for worst, has often preceded it.the basic intent of the second chapter is to develop an understanding of islamic perspectives on the meaning of life

29、, as revealed or discerned through the course of a necessarily basic and selectively condensed islamic history, past and present; as well as directing a critical eye towards a very challenging and original future.the third chapter speaks to the theoretical foundations of islamic economics as derived

30、 from an almost overwhelming diaspora of cultural mix, bound as intimates geographically, linguistically, religiously, or rather spiritually, and most ultimately, historically.chapter four centres on presenting a necklace of connections related to the path chosen for laying down a modernized economi

31、c infrastructure, based on islamic scholastic interpretation of the spiritual path given guidance to by the prophet muhammad, through to the conceptual infrastructure of modern economics advanced by muhammad baqir al-sadr, to the more recent developments of present day islamic scholars such as umer

32、chapra.chapter five, a singular subset of chapter four, focuses on the specific interrelations by which the islamic banking system is constructed, the legal and practical basis of its profit-and-loss relationships, and the singular importance of the central bank.chapter six, effectively investigates

33、 and summaries how and why the islamic financial system fares in the real time context of the global political-economic present, and what measures may be taken to maintain its viability.the aims, objectives and results of this ph.d. candidates research are succinctly encapsulated above. this is also

34、 true of the singular contribution intended to be made by this candidate, with the addition here that the value and cogency of the substantive analytics, aspirations towards subtlety, literary style and even inserts of humour can only be truly appreciated upon being read. table of contents i. overvi

35、ew and insights concerning paradigm development in quantitative and qualitative research methodology 8 (a) introduction: language and responsibility in the power and use of images(b) towards rethinking the significance of world history: problems in paradigms(c) the purpose of research methodology(d)

36、 types of research methodology(e) essentials of qualitative research(f) the portents of grounded theory(g) postpositivism and the naturalist paradigm(h) the positivist era(i) criticisms of positivism(j) the postpositivist era(k) cultivating the political economy: insights of the triumvirateii. islam

37、 and the challenging new world milieu 23(a) concerning the islamic historical identity(b) on the current revival of islam(c) the islamic spiritual infrastructure(1) islamic law: the square of integration(2) the quran(3) sunnah(4) ijma(5) ijtihadiii. on the origins and theoretical development of isla

38、mic economics 32(a) islam in the afro-eurasian eclipse(b) towards achieving social justice: gleanings from the early yearsiv. from admonition to theory: intellectual transition towards developing the dynamics of an islamic economic infrastructure . 39(a) introduction to the intellectual influence of

39、 muhammad baqir al-sadr(b) the context of al-sadrs political and intellectual birth(c) iqtisaduna: the intellectual construct of the islamic economy(d) holistic overview of islamic economics: the part to the whole(e) the essential matrix of the islamic economy(f) islamic economics is not a science,

40、but a doctrine(g) al-sadr on the discrete relationship between production and distribution(h) on the issue of private property(i) the placement of ownership as a secondary instrument of distribution(j) on the issue of circulation(k) modern islamic economic objectives(l) the islamic economic challeng

41、e: on its own terms v. the constructive challenge of islamic banking 99(a) types of partnerships(b) sources of banking income(c) shirka and mudaraba agreements(d) the role of the central bank vi. islamic banking and the question of viability: selective realities from the real world context 124(a) no

42、tes on the history of islamic financial development (b) caveats on the ambiguity of definitions and statistics(c) islamic finance in the context of the global political economy(d) the political and economic context of the first stage of modernization(e) manna from oil (f) middle east-islamic relatio

43、ns with the us and the west (g) islamic finance in the global economy(h) the global economy and its theoretical visions(i) the metamorphosis of banking and finance(j) the rise of the star and crescent(k) ethical implications(l) the rise and convergence of aspirations(m) conclusion vii. bibliography.

44、166 chapter oneoverview and insights concerning paradigm development in quantitative and qualitative research methodology introductionlanguage and responsibility in the power and use of imagesthe power to communicate is deeply, fundamentally, and inalienably rooted in the ability to inform and organ

45、ize. indeed, such power, initially evolving from the skill to construct, deconstruct, and/or reconstruct images often very powerful images used positively or negatively may subliminally and significantly affect the psyches of mass audiences by investing authority in burgeoning attitudes, thinking, a

46、nd/or behavioral patterns which affect the subjects of a particular discourse long after initial communication has taken place.moreover, such affective and significant sublimation tends toward greater insinuative potency when repeated - variously - over a course of generations. simultaneously theref

47、ore, also inherently attending to such communicative power, is a responsive accountability for what is knowingly communicated. accordingly, it may be properly maintained that the gift of language through which the power of images is invoked, brings with it the burden of intellectual responsibility t

48、o convey but not distort; most especially where the messengers are not only perceived to bring to bear a “uniquely qualified professional” interpretation of the facts to a broad public, but also where systematic intellectual manipulations may lay the ideological base for societal practices at large.

49、 noam chomsky, language and responsibility, (1990) pp. 4-5; see also edward w. said, representations of the intellectual: the 1993 reith lectures, (1994), p.xii. thus, while linguistic frankness, even artfulness is permissible in the effort to instruct, intellectual dodginess is not.towards rethinki

50、ng the significance of world history: problems in paradigmsin the context of developing informed intellectual sensitivity and focus to redress commonplace perceptions, or misperceptions concerning such matters as the clear cultural divide between east and west, first, second, and third world peoples

51、, primitive and modern societies, and other notably long standing malleable obscurities, such heartfelt principles respecting intellectual integrity and responsibility, see said, pp.x-xv; 8-10; 13-17; see also chomsky, language and responsibility, (1990) pp. 4-5. while not novel, had certainly becom

52、e increasingly pronounced it seems, within the last fifty years. see generally, george g. m. james, stolen legacy, (1954). more to the point, while new paradigms have not in each case necessarily resulted from what arguably may be seen as representative examples of these later works, see generally,

53、martin bernal, black athena: the afroasiatic roots of classical civilization, (1994); see generally also, james. the seminal importance of such investigations and their subsequent discoveries to the world at large are, nonetheless, invariably proving to be inescapable. thus, while individual intelle

54、ctual approaches may justifiably incur qualified criticisms, see marshall g. s. hodgson, rethinking world history, (1993) pp.317-318, for edmund burkes criticism of hodgsons approach. see also s. parvez mansoor, the enigma of modernity, the muslim news, 27 p.6, (october, 1995), p.6. certainly these

55、works en bloc cannot be summarily dismissed. in fact, overall, such critical discoveries intensively underscore the singular relevance of the commitment towards rethinking the significance of world history as a contextual interweave. see martin bernal, p.1; see also generally hodgson, rethinking wor

56、ld history; see also generally eric r. wolf, europe and the people without history, (1982); see also generally james; see also generally yusuf ben jochannon, africa, mother of western civilization, (1988); black man of the nile, (1990); african origins of the major western religions (1991); more to

57、the point, such an approach to world history is the key towards developing a truly comprehensive understanding of the strategic interlinks between cultures and civilizations in the real world context of a global society, especially at what has been recognized as the increasingly decisive political and economic levels, see walter laquer, the uses and limits of intelligence, (1991), p.xxi; see also b.