Institutional Economics Lens: A Comprehensive Review on the Interdisciplinary Integration between Islamic Studies and Economics

Abstract

The paper offers on an in-depth exploration of the harmonization of economic paradigms with the principles ingrained in Islamic teachings. It primarily emphasizes Islamic finance as a field and scrutinizes its methodologies to reveal the extent of correlation existing with conventional economic theories. The necessity for a thorough analysis of this fusion arises from the perpetually evolving global financial landscape and the quest to establish financial systems that are not only sustainable but also value-based. Islamic finance, aiming to uphold ethical, social, and environmental dimensions, has gained considerable significance in both Muslim-majority and non-Muslim-majority jurisdictions. This systematic review offers a detailed dissection of the interdisciplinary nature of Islamic finance by elucidating the conceptual underpinnings of the ethical values that guide its operations and the conventional economic principles upon which it stands. Furthermore, this paper unravels the Shariah-compliant financial instruments that differentiate Islamic finance from its conventional counterparts. Through the lens of the existing literature, this review provides the historical context and development of Islamic finance, alongside its various economic applications, which contribute to the amalgamation of faith-based and financial principles observed in this field. Such comprehensive information will foster an improved understanding of Islamic finance while showcasing its potential to address numerous global financial challenges.