Islamic business research

• Date: 01 September 2019
• Author: M. Kabir Hassan
• Published date: 01 September 2019
• DOI: http://doi.org/10.1002/tie.22070

EDITOR'S NOTE

Islamic business research

M. Kabir Hassan

Department of Economics and Finance,

University of New Orleans, New Orleans,

Louisiana

Correspondence

M. Kabir Hassan, University of New Orleans -

Economics and Finance, 2000 Lakeshore

Drive, New Orleans, LA 70148.

Email: mhassan@uno.edu,

kabirhassan63@gmail.com

Abstract

The Islamic finance industry, which is deeply rooted in Islamic law (Sharia), will

undoubtedly have an increasingly large impact on modern finance in the years to

come. Since its formal establishment in the 1970s, the industry has already grown to

US$2.2 trillion, with a growth rate that outpaces that of conventional finance. The

purpose of this special issue is to inspire academic researchers, regulators and stan-

dard setters, and providers and users of Islamic funding to advance the research of

critical issues related to the efficiency of Islamic finance.

KEYWORDS

business, faith traditions, Islamic finance, worldview

The interplay among economics, religion, and culture remains a fasci-

nating but underexplored topic in economics. The classical view is that

religiosity is an irrational choice that decreases with economic perfor-

mance. However, recent studies have taken issue with this characteri-

zation, stating that the positive externalities of religion, such as trust

building, reputation, sense of belonging, and mutual support, can lead

to economic growth. Recent literature has also examined the effect

culture has on economics, with religion often serving as a proxy for

culture. Such studies echo the indecisive nature of the previous litera-

ture, finding religion can impact the economy positively as well as

negatively.

Thus, the question remains: does religion have a net positive

impact on economic performance? Answering this question is an

important motivation of this special issue. Islamic finance offers an

ideal testing ground for this topic for the following four reasons: First,

Islam is currently the second-largest religion in the world and is grow-

ing faster than any other religion. Second, the Islamic financial indus-

try is growing internationally across financial services and markets.

Third, unlike other religions that shy away from specific positions on

economic systems, income redistribution, free trade, and private prop-

erty, Islam advocates an unambiguous position on these issues.

Fourth, studying Islamic finance provides essential insight into how

world religions affect economies.

The most essential way that Islamic economics departs from con-

ventional economics is in its emphasis on values and ethical theory.

While conventional economics considers economic agents to be col-

lections of preferences (attitudes, tastes, actions, and laws) that adjust

to changes in the costs and benefits of resources, Islamic economics

holds that human beings are servants and vice-regents of God on

earth, adapting their activities to fit the mandates of Sharia. Thus, in

Islamic economics, the rational being of conventional economics is

swapped for the “faithful”being who seeks to fulfill personal interests

only in accordance with social bounds and communal interest. Islamic

economics encourages economic activity, production, trade, and free

markets, but with the additional stipulation that economic activities

be based on an ethical and morally legitimate foundation. Economic

resources are to be employed such that utility can be obtained at both

the material and spiritual level and all economic activity is both finan-

cially and socially beneficial.

Islamic economics has developed an all-encompassing ethos,

based on Sharia, that prescribes how business and commerce should

operate, how responsibilities to God and society should be managed,

and how banking and finance should be structured. It is important that

these ideals be put to the test. Given that the prevailing business envi-

ronment in most of the world is largely unfriendly toward the Islamic

model, have businesses with Islamic values been successful in translat-

ing their values into better economic and spiritual performance, or

DOI: 10.1002/tie.22070

Thunderbird Int. Bus. Rev. 2019;61:655–657. wileyonlinelibrary.com/journal/tie © 2019 Wiley Periodicals, Inc. 655