Integrating the socialmaslahainto Islamic finance

Ismail Cebeci

Accounting Research Journal, 2012, vol. 25, issue 3, 166-184

Abstract: Purpose - The purpose of this paper is to analyse the extent of the contribution of the current Islamic financial system to society in terms of social responsibility (SR) required by the concept of socialmaslahah. Design/methodology/approach - The paper adopts a critical analytic approach in considering the reasons of the failure of the social dimension of Islamic financial intermediation based on real figures of selected Islamic banks. Findings - Concepts of SR and corporate social responsibility (CSR) are not enough to describe Islamic Banks' responsibilities. Also, this failure cannot be understood only with reference to the “external environment”, i.e. competition‐driven, capitalistic market conditions; but it is also closely related to the transformation of Islamic finance into an almost exclusivelymurabaha‐based Islamic banking, which promotes more individualmaslahahthan socialmaslahah. Compared to themurabaha, other product structures such asmudarabaandmusharakaseem to be better instruments for expanding welfare and alleviating poverty. Practical implications - There is a close relationship between Islamic banking contracts and social contribution of Islamic banks. This paper provides some practical solutions in this context. Also, empirical evidence derived from several conventional and Islamic banks supports these arguments. Originality/value - This paper is the first to analyse the reasons for the social failure of Islamic Banks and to recommend substantial solutions in this scope and also offers practical help to practitioners of Islamic banking on the issue of social contribution of the Islamic banking business.

Keywords: Islam; Banking; Social responsibility; Society; Ethics; Islamic finance; Islamic banking; Contracts; Murabaha; Maslahah (search for similar items in EconPapers)
Date: 2012
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Citations: View citations in EconPapers (5)

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Persistent link: https://EconPapers.repec.org/RePEc:eme:arjpps:v:25:y:2012:i:3:p:166-184

DOI: 10.1108/10309611211290158

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