By Bernardo Vizcaino, CAIA
The following article was first published in the Opalesque Islamic Finance Intelligence – Fifteenth Issue (see reference link) and is reprinted here with permission.
It seems that Islamic finance is getting a makeover. Recently there have been various (some light-hearted) attempts to dissect Islamic finance: from comparing Islamic finance to every-day items, tongue-in-cheek forecasting of industry developments, clever use of soccer metaphors, to berating the much-hyped self-congratulation that we periodically witness in conferences and industry events. This kind of commentary, taken as a whole, hints to a desire to revisit the message of Islamic finance and how this is communicated.
One of our contributors recently inquired about who had coined the term Islamic finance, and this led to discussions surrounding the first forays into Islamic Economics and looking further back to the early days of Muslim commerce.Almost simultaneously I had been asked to provide feedback to one of the above-mentioned questionnaires, one of them asking us to identify what everyday items best resembled Islamic finance. The latter was an intriguing exercise since it was effectively reaching out to our subconscious perception of the industry.
These were intriguing queries, looking at the origins of Islamic finance (exactly where it came from) and the characteristics we ascribe to this industry (metaphorically speaking that is). Overall, these and many other approaches carry a common denominator, they are all trying to make the topic more accessible to the masses.
Perhaps the definition of Islamic finance is too eccentric for a lay person, in other words it doesn’t make sense except to those who are already familiar with Islamic finance in the first place. Furthermore, it appears that there is no standard definition of Islamic finance (some are even circular – making reference to Islamic banking… what good is that!) and all of them lack simplicity (often degenerating into multi-paragraphed expositions).
Naturally, the core of Islamic finance is Shariah, but once again it does not lend itself for easy assimilation by newcomers. Then again, there have been many qualities ascribed to Islamic finance: borrowing from ethical and sustainable finance, focusing on the interest-free and participatory nature of its products, to the socially responsible and community engagement role of its member banks. All of these terms are valid, but there is yet to be a definition that is all-encompassing.
Perhaps the message is not being communicated effectively, not reaching or catering to the right audience (specifically those weird people outside of the industry which we will refer to from now on as “consumers”). Yes consumers are the ultimate audience, and as we see discussions gravitate around the definition it is equally important to observe how such definitions are being delivered.
Even a cursory survey of industry portals yields very few definitions of Islamic finance or Islamic banking, presumably because they are such obvious terms that they don’t require an introduction. However, communicating what is Islamic finance could use novel tools and some lateral-thinking. Sometimes metaphor, symbolism, and even parody can help illustrate the inner-workings of the industry.
Perhaps it matters little what we consider to be the ‘correct’ definition of Islamic finance. Notice my attempt to avoid offering a definition (attribute this to laziness if you will). It might be that what needs to be redefined is the focus of the industry. The most important concern is not a few sentences or a nominal description, but rather to engage more people and broaden the appeal of Islamic finance – beyond the limited walls of a few service providers. Definitions are useful, but they are of little use if the industry keeps talking to itself.
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- EPL for Islamic Finance (benefitpoint.wordpress.com)
- E.P.L. in Islamic Finance: EDUCATION – How & What (benefitpoint.wordpress.com)
- Tackling Operational Issues faced by Islamic Banks – Mufti Ehsan Waquar Ahmed, Shariah Advisor UBL Ameen Islamic Banking, in discussion with Furqan Ayub in program “Live Wire InFocus” on Business Plus. (benefitpoint.wordpress.com)