Islamic Financial System Epidemic

Abstract

The global financial and ensuing economic crises have had negative impacts on a majority of firms, businesses, countries and indeed, the society. The traditional and capitalist way of financing has been criticised for its failure; thus, the consumer has started to move towards an ethical and sustainable form of finance. Islamic finance, which already existed by the period is said to be the panacea to the global crisis. It is being presented that Islamic finance may pose as the remedy in curbing economic ills. How true is this? Over the period of more than 40 years since Islamic finance was first introduced, the main players and regulators discuss pertinent issues to the development of the Islamic finance industry. Bankers and lawyers were vocal about the need for education and more regulatory upheavals in order to create a level playing field for Islamic finance, as well as propagate Islamic banking products to a wider clientele. This paper discusses a series of financial crises and the outbreak of Islamic financial system. The Islamisation of the conventional financial system in Malaysia is highlighted. We conclude that there is room for improvement, and there also is prominent untapped potential in non-bank financial institutions.