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Sacralising finance: risk-sharing Islamic finance
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Date
2017
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Abstract
Finance can be thought of as an engine of transformation and intermediation that bridges gaps between financial surplus and deficit units, between now and the future and between certainty of now and uncertainty of the future. It transforms value through maturity and risk transformation. This crucial function can be considered the reason for existence of finance. It creates incentives for surplus units to postpone the certainty of their financial resources now to the uncertainty of, presumably, higher amount of these resources in the future. It also encourages the deficit units to bring the future uncertain plans forward to the more certain present. Both units take risks. In other words, finance makes both units risk takers. The surplus units risk their resources now for more in a highly uncertain future. The deficit units risk being able to validate their obligations with a higher income stream in an uncertain future. How can finance become sacralised?
Keywords
Islamic finance , Risk-sharing , Finance
Citation
Mirakhor, A., Ng, A. B. K., Dewandaru, G., & Abdul Hamid, B. (2017, April 18-19). Sacralising finance: risk-sharing Islamic finance. Keynote speech presented at the 2nd Islamic Finance, Banking and Business Ethics Global Conference, at Sasana Kijang, Kuala Lumpur, Malaysia.
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