Al-musharakah-led Islamic sustainable finance

Mat Ali, Syuhaeda Aeni and Othman, Ahmad Azam and Hasan, Rusni (2024) Al-musharakah-led Islamic sustainable finance. In: Islamic Finance and Sustainable Development: A Global Framework for Achieving Sustainable Impact Finance. Islamic Business and Finance Series, 1 . Routledge, Oxon & New York, pp. 148-161. ISBN 9781032743073

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Abstract

Malaysia continues to be at the forefront of the Islamic finance industry with its diversity of innovative Islamic instruments and maturity of the financial system. The principles of Islamic finance have strong connections to financial stability, long-term sustainability and corporate social responsibility within the global business context as it insulates the Islamic financial system from uncertainty, excessive leverage and speculation. Islamic finance embraces sustainability when its business objectives are beyond generating profit but is also linked with value-based intermediation (VBI) and environment, social and governance (ESG) principles. The role played by Islamic finance in this venture should also be in line with the United Nations’ Sustainable Development Goals (SDGs) and Maqasid Shariah. Musharakah is one of the commonly used Islamic financing contracts across the globe and is mainly developed and used in banks and capital markets. The literature on Islamic banking supports the view that the adoption of equity financing such as Musharakah would increase the value of Islamic banks and make them resilient in a crisis. However, Musharakah is not as popular as other Islamic financial instruments, as most Islamic banks prefer debt financing to equity financing. Some scholars argued that Islamic philosophy cannot be translated into reality unless the use of Musharakah is expanded by Islamic banks. Thus, the objective of this study is to analyse the Musharakah instrument in terms of its sustainability in Malaysian financial markets. This study also explores its advantages and potential challenges to consumer financial welfare. The finding reveals that the Musharakah instrument has wide potential as it caters to various types of investors and promotes mutuality, sustainability and interests in the business of all parties concerned.

Item Type:	Book Chapter
Uncontrolled Keywords:	Musharakah, SDG, Islamic finance
Subjects:	H Social Sciences > HG Finance H Social Sciences > HG Finance > HG3368 Islamic Banking and Finance
Kulliyyahs/Centres/Divisions/Institutes (Can select more than one option. Press CONTROL button):	Ahmad Ibrahim Kulliyyah of Laws Ahmad Ibrahim Kulliyyah of Laws > Department of Islamic Law
Depositing User:	Dr Ahmad Azam Othman
Date Deposited:	14 Feb 2025 09:52
Last Modified:	14 Feb 2025 09:52
URI:	http://irep.iium.edu.my/id/eprint/119697

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