Undecidability reflects a fundamental limit to logical reasoning that permeates formal analysis in diverse areas of natural and social sciences. We present an intuitive approach to understanding how undecidability may emerge endogenously in modeling a wide range of real-world problems. Not only does this allow for a better understanding of these problems, but it also provides a gateway for a holistic approach to rational decision-making.

It is proposed that wage maximization is one of the fundamental principles of Islamic economics, and should be counter-posed to the profit maximization principle of capitalism. Wage maximization needs to be analyzed for both the macroeconomy as well as for the microeconomy, since wage maximization has to be realized at the level of the firms of the microeconomy. A mathematical model for the Islamic macroeconomy is postulated that determines how to maximize macroeconomic wages. A model for a firm is proposed that pays minimum wages based on macroeconomic wage maximization. Wages can be further augmented by wages having a variable component based on profit and loss sharing by the workers with the firm, and which entails a degree of risk. Fixing the variable wage component results in the rate of profit of all firms becoming equal to the macroeconomic wage maximizing macroeconomic rate of profit.

This research aims to investigate the relationship between sustainability practices and financial performance in Asian Islamic banks. A sample of 23 Islamic banks from six Muslim countries in Asia was selected for the study, and data were collected from their annual reports from 2009 to 2018 using the weighted content analysis method. However, endogeneity problems were identified in the data, requiring the use of the Generalized Method of Moment (GMM) for empirical testing. The findings of this study indicate a positive and significant relationship between sustainability practices and financial performance in Asian Islamic banks, as measured from the perspectives of management, shareholders, and the market. These results imply that institutions that invest more in sustainability practices can expect to achieve a higher return on their investment. The study also provides guidance for the efficient management of sustainability practices from an Islamic perspective, which can contribute to the improvement of financial performance in Islamic banks. Overall, this research offers important insights into the relationship between sustainability practices and financial performance in Asian Islamic banks, which can inform decision-making and encourage greater investment in sustainability practices in these institutions.

Islamic Banking and Finance (IBF) has had forty years of impressive growth, yet, within the Muslim world, there is a paradox of huge accumulated wealth and seriously underdeveloped financial markets. This paper examines whether over its 40-year existence, IBF has lived up to its anticipated goals and objectives. It argues that growth has been patchy with huge gaps, missing links and missed opportunities. IBF has progressed not through innovation but imitation. Having replicated conventional banking and capital market products, IBF products like sukuk have largely mimicked conventional coupon bonds. Thus, IBF has not been able to offer new asset classes that can add value. Its products have the same interest rate risks and contagion effects. Given the higher transaction costs involved in structuring shariah compliant products, it is hard to see how they can offer even similar, if not superior returns. Further, with lower liquidity from less active and incomplete secondary markets, IBF cannot continue to play the same game as conventional players and hope to come out ahead. Yet, the paper argues, that the shariah offers huge latitude for innovation, especially of risk sharing instruments. A funding transaction or a sukuk based on a risk-sharing structure like Mudarabah, would have an entirely different risk return profile, no interest rate risk, very low correlation and no contagion. Further. increased reliance on risk-sharing contracts would move the financial system away from the fractional reserve framework, and closer to a mutual fund model. Such a move minimises systemic risk through risk dissipation and reduces the liquidity mismatch inherent to banking. Where the macro economy is concerned, system stability is enhanced by reducing risk concentration within the banking system and minimizes the contingent liabilities of governments by minimizing the use of deposit insurance. If IBF is to move on to a more successful and effective next phase, the gaps and inadequacies identified here, will have to be addressed.

Since the launch of the Sustainable Development Goals (SDGs) by the United Nations (UN) in 2015, the global financial markets have strongly inclined towards being more ethical, responsible and value-based investing. Similar with the conventional counterparts, the stakeholders in Islamic finance have initiated its efforts and thrives in manifesting and incorporating the global sustainability agenda into its business operations and product innovations. Given that the principles of Islamic finance fundamentally support socially inclusive, environmentally preserved and economically prosper, the potential for Islamic finance to play a role in realizing and translating the SDGs into practical approach is extensively explored in this paper. This paper reviews the role of Islamic finance industry, specifically the Islamic banking and Islamic capital market in Malaysia, in contributing the realization and manifestation of the SDGs in its day-to-day business activities by analyzing few existing products in the local market namely, Islamic microfinance, Islamic green financing, green sukuk and ESG Islamic fund. The discussion presented in this paper predominantly derived from a comprehensive analysis conducted through literature review approach. The paper concludes that Islamic finance industry in Malaysia is still on the right track in terms of contributing to sustainable development goals, environmental preservation and social welfare, as advocated by the United Nations. All of the key stakeholders in Malaysia also have been working hard to make sure the overall Islamic financial ecosystem is aligning with the global sustainable finance movements. This paper provides an indirect motivation and personal incentive for the policy makers to continue assimilating and harmonizing the SDG elements into the Islamic finance industry.

In this paper, I explore Imam Ghazali’s concept of money and then extend those concepts to explain his ideas regarding ‘Riba’ (interest). In this paper I examine those aspects of Imam Ghazali’s ideas which were overlooked by previous studies. This paper argues that Imam Ghazali views a particular purpose of money, which involves the medium of exchange and a just unit of account while he criticizes the store of value function of money. I also examine the multiple symbols that Imam Ghazali uses to make the point, for example, money as a just ruler, or a mirror that reflects light but has no light of its own. This enables us to further elucidate the crux of Imam Ghazali’s argument which is that money loses its essential nature when store of wealth function become predominant. I also examine the text of the most important passages related to money in Imam Ghazali’s work to support the main arguments in the paper.

In this paper, we explore how economic policy to support sustainability can coordinate efforts to tackle climate risk, overcome environmental challenges and ensure human security. The financial system faces very significant risks posed by climate change, as well as the transition to a low carbon economy. As such, the ESG framework as it is needs to be enhanced in order to be itself effective and sustainable. Hence, we propose an enhanced ESG framework that is grounded in strong Islamic fundamentals to anticipate gaps that can be exploited. Considering human relationships with the natural world from the perspective of Islamic teachings holds great promise for rethinking resource management and preservation. A fundamental role of humans in Islam is that of trustees of creation. The need to achieve sustainable economic development globally and its transition to a low-carbon economy requires strong policies and initiatives to drive green and sustainable finance for the purpose of achieving public policy objectives effectively.

Islamic finance has been facing serious challenges both in terms of credibility as a divine and value-based system and sustainability. Many authors and research institutions have been indicating the issues and suggesting reforms for some years, but one major area that could not get due attention regarding the reform agenda is the Sharı̄’ah governance system and integrating the sustainability framework into the governance related regulations. Another staggering point is that Islamic finance is moving on the path of convergence with conventional finance. It requires well thought-out conceptual and operational frameworks of governance for Islamic Financial Institutions so that the requisite regulations could be introduced and effectively implemented to keep Islamic financial services distinct from conventional services. To suggest such frameworks, this qualitative study analyses the Sharı̄’ah Governance Framework introduced by the State Bank of Pakistan in 2015, and the governance related published material. It can be termed as a case study on Islamic banks’ Sharı̄’ah governance framework and is based on structured interviews with 32 research participants including banks’ Sharı̄’ah board members, Sharı̄’ah reviewers/auditors, experienced Islamic banking practitioners, and the researchers/academics. As a case study, it is based on five research questions and many sub-questions relating to the governance framework introduced by the State Bank of Pakistan in 2015 for Islamic banking institutions in Pakistan. Based on the findings of the study, it suggests the bases, processes, and measures for the Islamic banks and other financial institutions moving to Islamic social finance and integrating it to the sustainability framework. It assigns roles to the regulators, the banks’ Sharı̄’ah boards, BODs, and senior management, and the operations and audit staff. It could become a basis for reforms in the whole process of product development and implementation and conducting business by Islamic banking and finance institutions to realize the objectives of Islamic finance as a divine, just, and value-based system.

This article is a comment on Baaquie (2023). It revisits important discussions on Islamic Economics. I argue that historically Islamic economics is juxtaposed with capitalism and communism with the intent that somehow Islamic economics was capable of improving on the performance of both these systems. Baaquie (2023) is an interesting and important contribution as it tries in its own way to revive the old debates on Islamic economics but at the same time setting a direction which in many ways is also novel. In this “comment” on Baaquie (2023) I discuss the academic reasoning used to make the arguments, the paper’s departure from the existing literature on Islamic economics along with the main argument of the paper. Here I pay particular attention to Baaquie’s (2023) approach of distinguishing the micro and the macro economy in an attempt to establish the macroeconomic foundation of Islamic economics.

Islamic finance industry since its inception has faced a dilemma that has persisted in spite of its significant increase in market share and tremendous growth. The similarity that it has with the conventional finance industry makes many of the participants very unconformable. Behind this criticism are many embedded assumptions. One of it is that Islamic finance in its current form may not be ‘Islamic’: As if this line of the thinking opens the door for an existential crisis. In this paper we discuss the existential crisis of Islamic finance and explain the different ways it continues to deal with it and provide meaning to the industry and academia. Firstly, we offer a historical perspective on Islamic finance and how the first generation of Islamic finance scholars conceived the problem. Then we discuss the different ways the Islamic finance scholars continue to explain the meaning that Islamic finance contains. Here the focus particularly would be on the deontological nature of Islamic ethics and the importance of risk sharing instruments. The success of the Islamic finance industry in terms of its profitability and the opportunity it holds as a possible provider of meaning are presented. Finally, we focus on the role of the actor as not simply a receiver of meaning but as the creator of meaning.