SHARED VALUES AND

There is a lot of talk to advance ethical Islamic finance, but where do shared values start and end?

COOPERATION and trust-building are the core of socio-economic progress in any society, and sharing-based financial contracts contribute to promote these features.

Whether the gamut of new alternatives in the sharing economy, including fintech, crowdfunding and P2P (peer-to-peer) lending pan out to be systemically successful in the medium term, and how they maintain effectively their sustainability and relevance by creating shared values through risk-sharing, only time will tell.

In fact, “Creating Shared Values Through Risk Sharing” was the theme of the 8th Securities Commission Malaysia (SC)/Oxford Centre for Islamic Studies (OCIS) Roundtable, which was held last weekend at Ditchley Park, Oxford.

Sultan of Perak Sultan Nazrin Muizzuddin Shah, who is also the royal patron for Malaysia’s Islamic Finance Initiative, delivered the keynote address in the presence of SC chairman Tan Sri Ranjit Ajit Singh and delegates from across the world.

In the Islamic finance space, by its very nature, ethical values and their propagation through example, and the relevant products and risk-sharing are intrinsic.

After all, one of the common sobriquets of Islamic finance is profit-and-loss-sharing (PLS) banking. Islamic financial institutions, however, stand accused of “deliberately and systematically avoiding PLS modes of financing”.

Underpinning this is the ageold debate of whether Islamic finance is more to do with equity finance, which is considered to be more equitable in wealth distribution through both risk and profit sharing, or debt finance.

The roundtable organisers emphasised

TUESDAY, MARCH 28, 2017