On the regulation of the intersection between religion and the provision of financial services: Conversations with market actors within the global Islamic financial services sector

Abstract

Islamic finance finds itself in a unique position given its robust performance over the recent financial crisis suggesting its resilience as a financial system to exogenous shocks. Existing studies attribute this strong performance to its institutional and systemic regulatory framework, however, much of the extant literature is descriptive and lacks a holistic consideration for Islamic financial regulation. Our study differs from the extant literature by approaching this area of study as a nexus of institutional and systemic regulatory factors thus providing a richer view of Islamic financial regulation. We generate this richer understanding through discourse with market actors on these stylized debates thus allowing us to gain further insight to delineate and disentangle key concepts thus providing a more integrated framework of Islamic financial regulation. Our findings extend the academic literature in indicating that issues of institutional governance are nested within broader systemic regulation, that the need for regulatory harmonization persists, and that there are continual calls for the creation of a central monetary authority for the global Islamic financial sector. Our results enhance the extent of understanding of the focuses on developing sustainable regulation within the Islamic financial system.