Commitment of Islamic banks to long-term economic development and society welfare: the Sudan experience

Abstract

This paper attempts to evaluate the overall commitment of Islamic banks in Sudan to the economic development and social welfare, by analysing the pattern of financing provided by these institutions to the interested parties. The study developed three hypotheses with respect to the issue at hand and used annual data to test these hypotheses. The results indicated that the stated hypotheses of the study: commitment to long-term economic development, community development and social welfare, and risky investments could not be supported. The results revealed that there have been steady decline in the proportion of banks funds which were allotted to the long-term economic development, community development and social welfare, and risky investments in Sudan. The study helps in directing attention to the search for new ways of bringing Islamic banks to true spirit, and not artificial Islamic finance. Microfinance, new sub-institutions, entrepreneurship activities and private equity-like investments are only a few in that regard.