Advertisement

Fintech-Enabled Islamic Financial System and Financial Stability

  • Etsuaki Yoshida
Chapter

Abstract

This chapter picks up recent trends of Islamic Fintech, and sheds light on its potential effects on the stability of a financial system. Use of information and communication technologies (ICT) in financial services is expected to create huge changes, and so is to Islamic finance. Especially, Fintech will reduce the cost related to supply and consumption of financial services, but there is more than that. This study intends to sort out those benefits of using Fintech by describing positive effects in terms of Shari’ah and financial stability. While Islamic finance has achieved certain success in terms of quantitative growth and expansion to many countries, some academic scholars criticize the current practice as just “replica” of the conventional equivalent, and there is little element of Shari’ah in it. The study argues that Fintech can provide practical solutions to these criticisms, by focusing on the aspect of its networking capability. As a conclusion, increased application of Islamic Fintech will contribute to mitigating financial instability, by promoting financial inclusion and involving more diversified flow of funds.

Keywords

Fintech Equity-based financial system Crowdfunding waqf zakat 

JEL Classification

G20 G21 G28 

References

  1. Al-Rifai, T. (1999). Islamic equity funds: A brief industry analysis. Failaka International Inc.Google Scholar
  2. Al-Zuhayli D. W. (2001). Islamic Jurisprudence and its Proofs. (translation by El-Gamal, M.A.) Damascus: Dar al-Fikr.Google Scholar
  3. Askari, H., Iqbal, Z., & Mirakhor, A. (2010). Globalization and Islamic finance: Convergence, prospects, and challenges. Singapore: John Wiley & Sons (Asia).Google Scholar
  4. BNM. (2014). Financial stability and payment systems report 2014. Kuala Lumpur: Bank Negara Malaysia.Google Scholar
  5. De Lorenzo, Y. T. (2007). The Total returns swap and the Shari’ah conversion technology stratagem. New York: Dinar Standard.Google Scholar
  6. Demirgüç-Kunt, A., Klapper, L. F., Singer, D., and Van Oudheusden, P. (2015). The Global Findex Database 2014: Measuring Financial Inclusion Around the World, World Bank Policy Research Working Paper No. 7255. Washington, DC: World Bank.Google Scholar
  7. Diaw, A., Hassan, S., & Ng, A. B. K. (2010). Performance of Islamic and conventional exchange traded funds in Malaysia. ISRA International Journal of Islamic Finance, 2(1), 131–149.Google Scholar
  8. Economist. (2017). The race to become Islamic banking’s fintech hub.Google Scholar
  9. El-Gamal, M. A. (2003). Interest” and the paradox of contemporary Islamic law and finance. Fordham International Law Journal, 27, 1.Google Scholar
  10. Gainor, T. (2000). A practical approach to product development. A paper prepared for the fourth Harvard University Forum on Islamic Finance.Google Scholar
  11. Hamoudi, H. A. (2007). Jurisprudential schizophrenia: On form and function in Islamic finance. Chicago Journal of International Law, 7(2), 605–622.Google Scholar
  12. Hasan, Z. (2005). Islamic banking at the crossroads: Theory versus practice. In M. Iqbal & R. Wilson (Eds.), Islamic perspectives on wealth creation (pp. 11–25). Edinburgh: Edinburgh University Press.CrossRefGoogle Scholar
  13. Hasan, Z. (2010). Islamic finance: Structure-objective mismatch and its consequences. A paper presented at the workshop on Islamic finance at the business school Strasbourg University, France, on March 17, 2010.Google Scholar
  14. IFSB. (2017). Islamic financial services industry stability report 2017. Kuala Lumpur: Islamic Financial Services Board.Google Scholar
  15. Iqbal, M., & Molyneux, P. (2005). Thirty years of Islamic banking: History, performance and prospects. New York: Palgrave Macmillan.Google Scholar
  16. Kayed, R. N. and Hassan, M. K. (2010). Islamic entrepreneurship. Durham Modern Middle East and Islamic World. New York: Routledge.Google Scholar
  17. Leong, C. C. (2014). Development of securitisation in Malaysia – Cagamas experience. A presentation made at the Indonesia International Conference on Islamic Finance Surabaya, Indonesia, 3–4 November 2014.Google Scholar
  18. Lewis, M. K., & Algaoud, L. M. (2001). Islamic banking. Cheltenham: Edward Elgar.Google Scholar
  19. Massolution. (2015). 2015CF: The crowdfunding industry report. Toronto: The National Crowdfunding Association of Canada.Google Scholar
  20. Nagaoka, S. (2012). Critical overview of the history of Islamic economics: Formation, transformation, and new horizons. Asian and African Area Studies, 11(2), 114–336.Google Scholar
  21. Sahay, R., Cihak, M., N’Diaye, P., Barajas, A., Mitra, S., Kyobe, A., Mooi, Y. N., & Yousefi, S. R. (2015). Financial inclusion: Can it meet multiple macroeconomic goals? In IMF staff discussion note SDN/15/17. Washington DC: International Monetary Fund.Google Scholar
  22. Wilson, R. (1983). Banking and finance in the Arab Middle East. London: Macmillan.CrossRefGoogle Scholar
  23. World Bank. (2015). Islamic Development Bank, and Islamic Research and Training Institute. In Leveraging Islamic Finance for Small and Medium Enterprises (SMEs), Joint WB-IDB Policy report. Washington DC: World Bank.Google Scholar
  24. Yousef, T. M. (2004). The Murabaha syndrome in Islamic finance: Laws, institutions and politics. In C. M. Henry & R. Wilson (Eds.), The politics of Islamic finance (pp. 63–80). Edinburgh: Edinburgh University Press.CrossRefGoogle Scholar
  25. Zulkhibri, M., Ismail, A. G., & Hidayat, S. E. (Eds.). (2016). Macroprudential regulation and policy for the Islamic financial industry: Theory and applications. New York: Springer.Google Scholar

Copyright information

© Islamic Research and Training Institute 2019

Authors and Affiliations

  • Etsuaki Yoshida
    • 1
  1. 1.Kyoto UniversityKyotoJapan

Personalised recommendations