Page 38 - CMA Journal (Mar-Apr 2025)

Focus Section

5) Promotion of Ethical and Halal Business - Islamic offering accessible and ethical banking services to a
teachings encourage business practices that are wider population. Mechanisms like Zakat
beneficial to society and compliant with Shariah. The (mandatory almsgiving) and Waqf (charitable
Quran states: endowments) help ensure wealth redistribution and
social welfare. This focus on social responsibility
“Do not devour one another’s wealth unjustly nor
aligns financial growth with the well-being of society.
deliberately bribe authorities in order that you may
wrongfully consume a portion of others’ wealth.” 4) Stability and Resilience in Economic Crisis: The
(Quran 2:188) 2008 global financial crisis exposed the
vulnerabilities of conventional banking, driven by
The Prophet (PBUH) also emphasized ethical trade:
speculative trading and excessive debt. Islamic
"The best earnings are those earned by the labor of one's finance, which prohibits speculation (gharar) and
hand and by honest trade." (Musnad Ahmad 8371) emphasizes real economic activity, has shown
greater resilience during economic downturns. This
Principles of the Islamic Economic System stability makes it a compelling model for sustainable
economic development.
The Islamic economic system, guided by the Quran and
Hadith, is designed to ensure justice, fairness, and social 5) Growth of the Halal Economy: Beyond banking, the
responsibility. By eliminating riba, promoting ethical Islamic economic system includes industries such as
trade, ensuring wealth distribution through Zakat, and halal food, ethical investment, Islamic tourism, and
preventing speculative transactions, Islam fosters an fintech. Countries like Malaysia, the UAE, and
economy that benefits all members of society. In a world Indonesia have successfully leveraged the halal
facing financial crises and economic inequality, the economy to promote growth and innovation. The
principles of the Islamic economy offer a sustainable and global demand for halal-certified products and
morally upright solution for global economic challenges. ethical consumerism is rising, creating new
economic opportunities.
The Islamic economy and financial system offer a unique,
ethical, and sustainable approach to economic 6) Government Support and Global Expansion:
development. Rooted in Shariah principles, this system Islamic finance is gaining worldwide recognition,
prioritizes social justice, financial inclusion, and with governments and financial institutions
risk-sharing, making it an appealing alternative to increasingly offering Shariah-compliant products.
conventional financial models. As global economies face The global Islamic finance market is valued in trillions
financial instability, inequality, and ethical concerns, the of dollars and continues to expand in
Islamic economic system provides a viable framework non-Muslim-majority regions, including the UK,
with the following vital principles for stability and Europe, and Africa.
equitable growth, detailed as follows:
Global Lessons from Islamic Finance
1) Ethical and Interest-Free Finance: A key distinction
of the Islamic financial system is the prohibition of The Islamic economy and financial system provide a
interest (riba). Instead of interest-based transactions, balanced and ethical approach to economic growth,
Islamic finance operates on profit-and-loss sharing, emphasizing fairness, social welfare, and sustainability. By
ensuring fairness and transparency in financial integrating principles of financial justice, risk-sharing, and
dealings. This ethical approach reduces exploitative responsible investing, Islamic finance presents a resilient
lending practices and promotes economic stability. and inclusive alternative to conventional systems. As
global interest in ethical finance continues to rise, the
2) Risk-Sharing and Asset-Backed Transactions: Islamic economic model is well-positioned to contribute to
Islamic finance encourages equity-based a more equitable and sustainable global economy.
transactions through instruments like Mudarabah
(profit-sharing) and Musharakah (joint ventures). Islamic economies around the world offer valuable
Unlike conventional banking, where risk is often insights into alternative economic systems that integrate
placed solely on the borrower, Islamic finance ethical, social, and financial principles. Rooted in Shariah
ensures that financial institutions share risks with law, these economies emphasize social justice, equitable
investors and entrepreneurs, promoting more wealth distribution, and ethical financial practices.
responsible lending and investment practices. Countries such as Malaysia, the United Arab Emirates
(UAE), Saudi Arabia, and Indonesia have developed
3) Financial Inclusion and Social Responsibility: robust Islamic financial systems that provide important
Islamic economics supports financial inclusion by lessons for both Islamic and non-Islamic economies.

36 ICMA’s Chartered Management Accountant, Mar-Apr 2025