COVID-19 and Islamic Finance

The impact of the pandemic on Islamic finance is discussed in this Element, which provides an overview of the two branches of Islamic finance: Islamic commercial finance and Islamic social finance. It recommends ways to improve Islamic finance in order to reduce the wealth gap and achieve financial inclusion.

Format: Paperback / softback
Length: 75 pages
Publication date: 07 July 2022
Publisher: Cambridge University Press

Islamic finance is a rapidly growing sector that has been significantly impacted by the COVID-19 pandemic. This Element aims to provide a comprehensive overview of Islamic finance by examining two branches: Islamic commercial finance and Islamic social finance.

Islamic finance is a financial system that is based on the principles of Sharia, which is the Islamic religious law. It prohibits interest, which is considered usury, and encourages ethical and socially responsible investing. Islamic finance has been growing in popularity in recent years, particularly in Muslim-majority countries, as it offers a alternative to traditional finance that is in line with Islamic values.

One of the key branches of Islamic finance is Islamic commercial finance. This involves the provision of financial services to businesses and individuals, such as loans, investments, and trade finance. Islamic commercial finance is often used by businesses that are seeking to finance their growth or expand into new markets.

The COVID-19 pandemic has had a significant impact on Islamic commercial finance. Many businesses have been forced to close or operate at reduced capacity, which has led to a decrease in demand for financial services. This has resulted in a decrease in the value of assets held by Islamic financial institutions, which has in turn led to a decrease in their liquidity.

In addition, the pandemic has also highlighted the vulnerability of Islamic financial institutions to external shocks, such as economic downturns and political instability. This has led to concerns about the stability of the Islamic financial system and has raised questions about the need for more regulation and oversight.

Another branch of Islamic finance is Islamic social finance. This involves the provision of financial services to individuals and communities that are in need, such as low-income families, small businesses, and social entrepreneurs. Islamic social finance is often used to promote social and economic development and to address issues such as poverty, inequality, and environmental sustainability.

The COVID-19 pandemic has also had a significant impact on Islamic social finance. Many individuals and communities have been affected by the economic downturn. This has led to an increase in demand for financial services, particularly in areas such as healthcare and education. However, the pandemic has also highlighted the vulnerability of these communities to external shocks, such as job loss and income inequality.

In response to the impact of the pandemic, there have been calls for the further development of Islamic finance. This includes the need for more regulation and oversight to ensure the stability of the Islamic financial system and to protect investors. In addition, there is a need for more innovation in the field of Islamic finance, particularly in areas such as digital finance and sustainability.

Overall, the COVID-19 pandemic has had a significant impact on Islamic finance. While it has highlighted the vulnerability of the sector to external shocks, it has also shown the potential for innovation and growth. By adopting a more comprehensive approach to regulation and oversight, and by promoting innovation in the field of Islamic finance, we can help to unlock the full potential of Islamic finance to reduce the wealth gap and achieve financial inclusion.

Islamic finance is a rapidly growing sector that has been significantly impacted by the COVID-19 pandemic. This Element aims to provide a comprehensive overview of Islamic finance by examining two branches: Islamic commercial finance and Islamic social finance.

Islamic finance is a financial system that is based on the principles of Sharia, which is the Islamic religious law. It prohibits interest, which is considered usury, and encourages ethical and socially responsible investing. Islamic finance has been growing in popularity in recent years, particularly in Muslim-majority countries, as it offers a alternative to traditional finance that is in line the line line with Islamic values.

One of the key branches of Islamic finance is Islamic commercial finance. This involves the provision of financial services to businesses and individuals, such as loans, investments, and trade finance. Islamic commercial finance is often used by businesses that are seeking to finance their growth or expand into new markets.

The COVID-19 pandemic has had a significant impact on Islamic commercial finance. Many businesses have been forced to close or operate at reduced capacity, which has led to a decrease in demand for financial services. This has resulted in a decrease in the value of assets held by Islamic financial institutions, which has in turn led to a decrease in their liquidity.

In addition, the pandemic has also highlighted the vulnerability of Islamic financial institutions to external shocks, such as economic downturn. This has led to concerns about the stability of the Islamic financial system and has raised questions about the need for more regulation and oversight.

Another branch of Islamic finance is Islamic social finance. This involves the provision of financial services to individuals and communities that are in need, such as low-income families, small businesses, and social entrepreneurs. Islamic social finance is often used to promote social and economic development and to address issues such as poverty, inequality, and environmental sustainability.

The COVID-19 pandemic has also had a significant impact on Islamic social finance. Many individuals and communities have been affected by the economic downturn. This has led to an increase in demand for financial services, particularly in areas such as healthcare and education. However, the pandemic has also highlighted the vulnerability of these communities to external shocks, such as job loss and income inequality.

In response to the impact of the pandemic, there have been calls for the further development of Islamic finance. This includes the need for more regulation and oversight to ensure the stability of the Islamic financial system. In addition, there is a need for more innovation in the field of Islamic finance, particularly in areas such as digital finance and sustainability.

Overall, the COVID-19 pandemic has had a significant impact on Islamic finance. While it has highlighted the vulnerability of the sector to external shocks, it has also shown the potential for innovation and growth. By adopting a more comprehensive approach to regulation and oversight, and by promoting innovation in the field of Islamic finance, we can help to unlock the full potential of Islamic finance to reduce the wealth gap and achieve financial inclusion.

Weight: 111g
ISBN-13: 9781009189477