COVID-19 AS WAKE-UP CALL TO RECONSIDER THE MAINSTREAM FINANCIAL PRACTICES: ISLAMIC FINANCE PERSPECTIVE

Khaled Nour Aldeen

doi:10.20473/jde.v6i1.20955

Abstract

This paper aims to present recommendations that can immune a conventional financial system against the global crisis, particularly the Covid-19 pandemic crisis from the lens of Islamic finance. This paper contends that Islamic finance is a relatively immune financial system comparing to the mainstream financial system by eliminating Riba and considering only asset-backed transactions as fruitful ones. This paper begins with the conceptual investigation of the literature on the principles of Islamic finance. The literature’s origins include primary sources (Quraan and hadith) and secondary sources (books, journals, and online resources). This paper is only conceptual and does not aim to examine the issues or theories empirically. The article will be useful to develop hypotheses for future research, especially in Islamic finance. Islamic concepts will of interest, especially for countries that adopt the conventional financial system. This paper will also be useful in the introduction for both Islamic and conventional finance practitioners alike. This paper provides a conceptual model to substitute the dominant conventional economics. Highlights the necessary steps to reconsider the conventional financial system. Islamic finance can mitigate the impact of COVID-19 on the economies mainly because of the PLS (profit-loss sharing) system and Islamic ethics in financial transactions. The paper shows its originality in substance and makes a unique contribution to the literature on systems and ethics by emphasizing Islamic finance practices approaching an effective alternative to conventional finance. Keywords: Islamic finance, mainstream finance, Covid-19JEL Classifications: G00, Y9

Highlights

Selflessness, solidarity, compassion have stood out amidst the novel coronavirus pandemic to become the values that unite humankind worldwide, regardless of religions, nations, and ethnic backgrounds
Islamic economics and finance principles have the natural ingredients to be at the forefront of setting those moral principles in place (Aldeen, Herianingrum, & Al Agawany, 2020)
The purpose of this article is to highlight some procedures that might mitigate the financial repercussions attached to the unprecedented events considering the COVID-19 breakout

Summary

Introduction

Selflessness, solidarity, compassion have stood out amidst the novel coronavirus pandemic to become the values that unite humankind worldwide, regardless of religions, nations, and ethnic backgrounds. Khalid Nour | Covid-19 as Wake-Up Call to Reconsider The Mainstream Financial Practices: Islamic Finance Perspective. The main reason that the Islamic economy and finance have received this high consideration during the last few decades is their potential, certainty, and quality in uplifting economic development and growth of the human being, aptitude in poverty reduction, and socioeconomics welfare. It is transferring wealth from looser to the gainers Meaning this process does not increase the produced quantity. Several layers of financial transactions sit on top of the real economy represented by a small basement (Real Gross domestic product). It all will create an unstoppable growing indebtedness for both government and corporation. After the introduction mentioned above presents a brief review of the Islamic finance literature showing, the authorities and policymakers should consider the Islamic perspective and conclude

Literature Review

Conclusion