ABSTRACT
This chapter first critically evaluates the three core concepts of the morality of Islam in relation to finance, namely indebtedness, accumulation, and interest and explores their role in the global financial crisis of 2008. Second, the study traces the emergence and development of Islamic finance within the global financial system and discusses the role of instrumental morality in the convergence of the products and services (provided by the Islamic financial institutions (IFIs)) toward conventional institutions. Third, it examines whether the IFIs have been successful in terms of offering a solution to the moral problems arising due to the operations of the conventional financial sector, with particular attention to the core principles explored in the first part. It argues that the normative dimensions of Islamic finance provide authentic solutions to the most common moral problems of the conventional financial system, such as indebtedness, accumulation, and interest. Lastly, this chapter ends with suggestions of some short-run and long-run objectives that IFIs should fulfil as the developmental goals of Islamic economics.
