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Co-existence of modernity and Shari’ah ruling : considering the developments in Islamic banking and finance in multiple modernities framework.

Asutay, Mehmet (2009) 'Co-existence of modernity and Shari’ah ruling : considering the developments in Islamic banking and finance in multiple modernities framework.', Re-imaging the Shari’ah : theory, practice and Muslim pluralism at play. Palazzo Pesaro-Papafava, Venice, Italy, 13-16 September 2009.


Islamic banking and finance (IBF) emerged as a novel financing method since mid‐1970s with an objective of managing the wealth in a religiously informed manner. While the initial perception in the West was not necessarily encouraging, by 1990s IBF managed to capture the attention of the main players in international financial and banking circles due to the success it demonstrated. Consequently, IBF has become part of the international financial markets recognised as heterogeneous financial products. In addition to number of Muslim countries, European countries have facilitated the internalisation of IBF activities through new legislations and regulations. While it is true that rudimentary principles of IBF historically were practised in the Muslim societies, the institutionalisation of IBF is rather new and has taken place in post 1970 period. This is a clear indication of internalisation of modernity and its institutions in the form of banks and financial firms. Considering that in essence IBF movement is a product of politically oriented identity politics aiming at creating Islamic solution to the modern problems, it seems that modern problems have imposed modern institutions onto Islamic discourse; and hence Islamic identity search has facilitated the expansion of modernisation in the Muslim world as a by product through redefining it by Islamic scholars. Importantly, in this process, Islamic economic values have been compromised for the success of these institutions; as fiqh dominated IBF solutions focus on the nature of process (Shari’ah compliancy) rather than the consequences of the given injunctions and developed products (Islam based). Hence, the recent debate between Shari’ah compliancy vs. Islam based IBF is a product of such developments, which implies the conflict between Islamic values against modern construct of fiqh understanding of IBF, as the latter is constructed with modern economy requirements of efficiency and profit and return maximisation through the approval of Shari‟ah scholars who claims to uphold Islamic values. Thus, considering Islamic finance as part of multiple modernities project implies, in a rational way, bringing two different worlds together. As with the facilitation of the IBF in some of the EU countries, there is an implicit recognition of a religion based financing in the West indicating the recognition of rationale and logic that is behind this development beyond the „universal modernity‟. This, consequently, implies that universal modernity accepts the existence and the practice of socially constructed multiple modernities as in the case of IB, which contributes to pluralism. Against this background, this paper attempts to evaluate the developments in IBF by locating it as part of the (unintended) modernisation produced by Islamic political identity search. Hence, new (multiple) modernities are originated in the process, which has received recognition by the universal modernity located in the enlightenment process and is reflected in the practice of secular socio‐political environment prevailing in the West. Therefore, this paper aims at exploring the concept of multiple modernities with the objective of locating the developments in IBF within this framework. In doing so, this paper argues that while multiple modernities are produced with the involvement of Shari‟ah scholars as part of the IBF institutions, developments in IBF in the secular Western countries is a clear indication of the internalisation of Shari‟ah based rulings within the secular legal and regulative environment. Such developments in the West indicate pluralism in the source of law making, which implies the acceptance of divinely ordained rules, which goes against foundational claims of secularism. This in itself means recognition of the cognitive rationality of revealed knowledge, albeit, in this case, very pragmatically with wealth generating reasons.

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Record Created:19 Jul 2010 12:20
Last Modified:07 Feb 2011 09:44

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