Ethical considerations and governance for Islamic social finance

Magda Ismail Abdel Mohsin () and Aishath Muneeza ()

Chapter 10 in Inclusive Finance, 2025, pp 188-246 from Edward Elgar Publishing

Abstract: Islamic social finance (ISF) is rooted in ethical principles derived from Shariah, emphasising social justice, poverty alleviation, and community empowerment. Unlike Islamic commercial finance, ISF lacks a universal governance standard and often operates in diverse regions with varying legal and regulatory frameworks. As ISF continues to evolve, particularly in the wake of global challenges like the COVID-19 pandemic, its potential as a key driver of socio-economic change is becoming increasingly recognised. This chapter explores the ethical standards and governance rules that guide both conventional and Islamic social finance, identifying the unique challenges in ISF due to its adherence to Shariah principles. Additionally, it proposes governance standards for ISF, focusing on transparent decision-making, social impact reporting, and independent oversight to ensure fairness and effectiveness. The chapter aims to provide insights into the importance of ethical considerations and governance in shaping a sustainable and impactful ISF system.

Keywords: Islamic Social Finance; Ethical Standards; Governance; Shariah Compliance; Zakat; Sadaqah; Waqf; Social Takaful; Islamic Microfinance; Social Sukuk; Transparency; Decision-Making; Social Impact Reporting (search for similar items in EconPapers)
Date: 2025
ISBN: 9781035348763
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