SHARIAsource Senior Scholar Anver Emon is co-editor of The Oxford Handbook of Islamic Law, and recently contributed an essay on the historical and policy debates concerning Islamic finance.
Islamic finance is a field of economic activity that has, since the 1980s, informed a global industry that is variously valued in the billions, if not trillions, of dollars. Often framed in terms of a Qur’anic ban on charging interest on loans, Islamic finance is frequently promoted as a response to market demand by Muslims who wish to comply with Islamic strictures when participating in market transactions. Yet it is not so easily reducible to this simple proposition. As will be discussed below, this explanation is often a post-hoc justification for practices that arose when (a) Gulf states enjoyed financial surplus from the 1970s oil book, and (b) free-market ideologies informed government regulatory policies in areas such as banking and finance. . . .
This article will review the literature on Islamic finance to inform the reader about what Islamic finance is, where and how it operates, its justifying logics, and the critiques of Islamic finance in both the academy and public policy sector. . . .