3 H.K. J. Legal Stud. 1 (2009)

handle is hein.journals/hkjls3 and id is 1 raw text is: Islamic Finance: A Religious Solution to
Financial Chaos?
Ravi Lakhani
This article contains an excellent introduction of the principles of Shariah law
and its impact on Islamic finance. A discussion on the status of Islamic
principles in modern financial systems then follows, with emphasis on how
these religious tenets affect the banking systems of Islamic countries via
legislation. Despite there being a certain degree of influence exerted by Islamic
principles on various financial systems, the author observes that a number of
difficulties still lie in the way of integrating religious principles into finance and
argues that such an incorporation will require the support of comprehensive
legal frameworks.
The implosion of capitalist beacons such as AIG and Merrill Lynch in recent
months has prompted Nobel Prize winning economists to liken the current
situation to that of the Great Depression.' One only has to revert back to the
last Wall Street Crash to see the social and political changes resulting from
economic downturns. Most notably, the amount of support received by Hitler's
regime showed a positive correlation with the negative economic growth in
1930s Germany. Clearly, reform gains greater acceptance in times of crisis. The
president of the European Commission, Manuel Barosso, has even been
quoted as calling for a new global financial order. Indeed, it has been
suggested that global banking is already entering a new era, away from an
inherent obsession with free market.2
On 7 February 2008, the Archbishop of Canterbury delivered a lecture on civil
and religious law in London.3 The focus of the controversial speech was the
ubiquitous influence of Islamic Law in Britain. However, far from suggesting a
dual system, he called for reasonable accommodation of religious values, but
within the existing social order and legal system. Moreover, in an interview with
BBC Radio 4, the religious leader stated that the integration of certain aspects
of Shariah law in Britain has become unavoidable. I propose that the
Archbishop's dictum constitutes more than an element of truth, and in the
context of global financial systems, Islamic banking requires more than
reasonable accommodation.
Principles of Islamic Finance
Before engaging in a discussion on Islamic finance, it is noteworthy that Shariah
is more than just a legal system; it denotes a way of life for its followers,
1  US economist calls financial crisis worst since 1930s, The Economic Times, 19 March 2008.
2 Fraser, S, Wall Street America's Dream Palace (New Haven: Yale University Press, 2008).
Williams, R, Civil and  Religious  Law  in  England: A  Religious  Perspective, (2008) 10(3)
Ecclesiastical Law Journal, pp 262-282.

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