Islamic moral economy emerged in the modern sense in the late 1960s and early 1970s as an attempt to develop an authentic understanding of the Islamic system of economics and develop policies accordingly. As part of this concept, Islamic banks and financial institutions are considered as the institutional aspects of this moral economy, which can pool their resources together to finance real economy activity. However, the transformation of Islamic banking into a commercial banking form since mid-1975 has resulted in unprecentedly successful financial performance, which, however, has been at the expense of the ‘social and economic developmentalist' aspirations of Islamic moral economy. Therefore Islamic banks and financial institutions are criticised for their social failure. This paper, therefore, aims to explore the social failure of Islamic banks and financial institutions and locate the sources of this failure. In moderating the social failure of Islamic banks and financial institutions, this paper suggests that a third institutional development in the form of non-banking financial institutions, such as Islamic social banking, Islamic microfinance, an awqaf system, ar-rahn or Islamic pawnbroking, and zakah funds should be created with the objective of serving the social and developmental needs of Muslim societies.
The history of Islamic economics, which originated in the middle of the twentieth century, is strongly tied to the practice of Islamic finance. The emergence of the commercial practice of Islamic finance in the Gulf countries and the challenge of the introduction of comprehensive Islamic economic systems in Pakistan, Iran and Sudan gave strength to the arguments about Islamic economics. The tension between theory and practice resulted in a division of the discipline into two groups: 1) the aspiration-oriented school which aspires to the ideal of Islamic economics and adheres to the mudaraba consensus obtained at the early stage, 2) the reality-oriented school which gives importance to the economic feasibility of Islamic finance and accepts the current practice of commercial Islamic finance. Islamic economics has been developed with arguments between both schools regarding aspiration and reality in the theory and practice of Islamic finance. This paper demonstrates that both groups share common ground for their arguments regarding the definition of riba; this implies that those who do not agree to its definition do not participate in the argument of Islamic economics. This fundamental framework of Islamic economics is robust and shapes every argument among Islamic economists although a few efforts to evade the framework can be recently found.
This paper focuses on Corporate Social Responsibility (CSR) in Islamic Economics and finance. The escalating social and economic problems in particular during the current financial crisis have raised new questions as well as expectations about corporate governance, ethical and social responsibilities. Commentators have raised “ethical” as the missing link in financing and also in running financial institutions. Corporate Social Responsibility (CSR) has emerged and developed with the aim of constructing and directing the social responsibilities of economic and financial institutions. The main objective of this paper is to study the concept of CSR from an Islamic perspective with special reference to the moral values that are essential in Islam. Importantly, Islamic banks are criticized for not considering the social dimensions related to development, which is an essential distinguishing point of Islamic moral economy. This paper therefore attempts to respond by suggesting a new paradigm within CSR framework to help Islamic banking and financial institutions to overcome the gap between aspirations and realities. As a concrete policy implication, the paper suggests that Islamic banks should shift from the practice of giving charity and zakah in a traditional manner to a more systematic method of performing charity and zakah in order to ensure community development.
This paper focuses on Shari'ah-compliant investments, which are managed in a Shari'ah-compliant manner that goes beyond defining a set of rules or guidelines to generate a static list of automatically screened equities. Shari'ah screening is about identifying a set of investments that adhere to Shari'ah principles and would thus be considered eligible for an Islamic investor to invest in. Generally, different Shari'ah mandates can be found across the industry that may result in different asset universe sizes and constituents. The main distinction between the different rulebooks is the use of either total assets or market capitalization as the base to value a company and to use as denominator for the different financial ratios. By using the top 200 large cap companies in the United States as well as Japan, this paper reveals that different Shari'ah mandates result in discrepancies in asset universe size, constituents, asset allocation and most important, return and risk. Therefore such an analysis of the Shari'ah mandates is crucial before launching a new Islamic fund to ensure that the advantages and disadvantages of the different mandates are recognized and taken into consideration. This analysis also revealed that different mandates might be advantageous in different regions and time spans.
As a strong executive, Thaksin Shinawatra brought many changes to Thai politics and public administration, including to budget allocation. This article explains how the Thaksin government procured funds to implement many ‘populist' policies. Before Thaksin, budget allocation was dominated by the bureaucracy. Initially, Thaksin attempted to reform the system by removing the prerogative over budget allocation from the bureaucracy. This effort, however, failed due to resistance from the Bureau of the Budget. As a result, budget allocation came to rest upon compromise between government leaders and the Bureau of the Budget. Almost all funds for Thaksin's policies came from the Central Fund and revolving fund within the existing budgeting system. This article also shows that budget allocation under Thaksin did not damage Thailand's public finances.
The island of Negros has such vast sugarcane plantations spread across the plains that it is also referred to as “Sugar Land.” Negros is divided in two provinces by mountains. Nearly 80% of Negros Oriental is considered upland, where upland farming has been carried out by migrant farmers since the 19th century.
The purpose of this study is to clarify the process of migration to the upland, to characterize farmers, lifestyle and to describe changes in agriculture. First, I present a brief history of development in Negros, highlighting the factors and processes leading to the creation of large tracts of plantation and at the same time migration and landlessness. This includes factors in the delay of land reform on the plains, and farmers' cultivation of the upland areas. Next, I describe farming practices in the upland areas of Negros Oriental from monoculture to mixed cropping. Lastly, I compare three selected upland villages with different backgrounds. Basically, farmers in the villages began with subsistence farming, and later moved on to cultivation of cash crops following progress in logistics and market access. Agricultural development and related changes can be attributed significantly to agricultural projects implemented in the area, as well as changes in villagers' sources of income.
Compared to the lowland plains, there are many constraints to agricultural production in the uplands, but farmers were able to adapt. Farmers combined subsistence farming, cultivation of cash crops and off-farm sources of income, resulting in a mixed-type of agriculture in terms of crops, farming practices and capital intensity. The findings from this study show an important perspective for developing upland agriculture in this and other upland areas in the Philippines.