|29th IBIMA Conference
3 - 4 May 2017
A Comprehensive Literature Review of Islamic Finance Theory from 2011 to 2016
Mohamed Wajdi Triki and Younes Boujelbène,
conventional finance, Islamic Finance deals with 100% Halal investment,
trade, transactions, lending and financial products. Thus, as its name
suggests, Islamic Finance respects the precepts of the Muslim religion
- which has many millions of practitioners in France! -, while
addressing an audience without distinction of religion and color.
Concretely, the consumer who chooses to entrust his money to Islamic
finance is protected from interests (Ribâ), speculation (Maysir and
Qimâr), uncertainty (Gharar) and the illicit (Haram). In Islamic
Finance, banks are forbidden to invest their money in Haram domains
such as the tobacco industry, pornography, eroticism, the alcohol and
wine industry ( And of course drugs), gambling, the hog industry and
unlicensed food, armaments (except for states), the banking industry
(except the Islamic banking industry), and so on. More clearly, Islamic
Finance seeks to simplify access to money for Muslims and non-Muslims.
To summarize, Islamic Finance is an alternative that allows the fair distribution of wealth and prosperity through commercial activities and morally acceptable investments in a participatory and ethical manner. This principle comes together under the name of 3P: sharing - losses – profits.
Despite the widespread literature on this topic, efforts to review and analyse research on Islamic finance theory and practice are very limited. This literature review paper proposes a new conceptual classification scheme, in order to classify past and current developments in Islamic finance research. More than 90 papers published on Islamic finance studies from 2011 to 2016 were classified and analyzed. For better Islamic finance-theory applications, researchers need to focus their effort on the empirical studies beside the theoretical developments, which are reached in advanced stages. Finally, this paper discusses some other future research directions.