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SHARIAH SYSTEMS: AN ALTERNATIVE IN THE MAKING, & Strategies Accelerating the Making


Author: Dhafer Salih Alqahtani, Principal, Rusmal Consult, Bahrain


Abstract: The financial crisis and its lingering effects might drag the global economy into a double dip during 2011, and we might witness an exact repeat of the 2008 crisis and the global economy slowly slide into a recession. These turbulent and chaotic market conditions present the Islamic banking industry, as well as potential new entrants to the industry, with an opportunity to join forces and resources in certain regions, specifically in Islamic countries, and to come to the forefront by reinventing and reinvigorating themselves as major mainstream providers of debt and equity, creating a globally recognised alternative to the present interest-based conventional system that is sustainable and reliable with full transparency and disclosure, in contrast to the current conventional system.


During the 2008 financial crisis, when the industry confirmed its resiliency and sustainability as a versatile and ethical financial alterna- tive, it was the first time that Islamic investment and finance was being considered as an alternative to the conventional structures and schemes in terms of financial products and solutions. Yet again, in 2011, the same calls are echoing louder to address the debt crises using Sukuk. Between the two crises, the Islamic Financial Institutions (IFIs) unfortunately went into hibernation, content to go through those stormy four years with minimum disturbance. Unfortunately, the uncertainty in the market place might extend to 2012 and 2013, and that reason, among many others, is enough for the industry as a whole to come together and abandon the silos mentality. It is impor- tant to capitalise on these calls to enhance the Shariah-compliant system as a logical choice and alternative to the present interest-based system, with both systems co-existing side by side in the global financial market for the benefit and prosperity of individuals, societies, institutions, businesses and countries regardless of their beliefs and political orientations as stipulated by Shariah law.


Keywords: Shariah-compliant, Financial Crisis, Malaysia, Islamic Financial Institutions


60 Global Islamic Finance April 2012


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