The Alpha and Omega of Abrahamic Finance

Abstract

“Abrahamic” finance can be defined as a form of finance which draws its parameters from Judaism, Christianity, and Islam. While the Islamic world has been at the forefront of applying religion to finance, the Judeo-Christian and Socially Responsible Investing (SRI) investment traditions can assist Islamic finance in broadening its parameters and appealing to a larger audience of investors. This chapter has been divided into two distinct parts. The first part (omega) will introduce financing guidelines for each of the Abrahamic religions. We will briefly describe the negative screening criteria pertaining to the three Abrahamic faiths, and the similarities that each of these faiths have in the realms of financial investments. By way of example each of the Abrahamic faiths finds usury and pornography morally and socially abhorrent. We advocate, as a strategy, the exclusion of stocks not allowed under other ethical frameworks of investing like Socially Responsible Investing (SRI). This would include companies that employ child labour and companies that pollute the environment. These practices, although religiously frowned upon in all the Abrahamic traditions, have yet to find a place in their investment guidelines. In addition to highlighting the negative screening criteria of Abrahamic finance and SRI, we would like to emphasize the positive screening attributes that SRI funds seek in companies, including but not limited to: a sound record on conservation of energy and natural resources, protection of the environment, and good customer relations. A negative and a positive bifurcate feature has yet to be incorporated into faith-based investment strategies. For example, the authors are unaware of any fund that both screens out companies that engage in usury while actively looking for companies that are improving the environment. Research in all three Abrahamic traditions suggests that the use of both positive and negative screening will generally be consistent with the teachings of the Quran; the Catholic Church and its commitment to advocate for systemic changes to improve the well-being of individuals and communities;1 and the strong focus on the ethical conduct of business affairs in the Jewish tradition.2