Asad Zaman (Dec 2015) “Objectives of Financial Institutions: Western and Islamic”, Journal of Islamic Business and Management, Vol 5, No. 2, p43-68. SSRN Version
Above paper was written post CILE (Text & Context) Seminar on Ethics & Economics in 2014, Doha, Qatar.
ABSTRACT
To understand the functions of the financial institutions within a capitalist system, one must understand the spirit of capitalism. This paper argues that the spirit is the pursuit of wealth without any moral or social restraints. Western financial institutions represent an embodiment of this
spirit. Furthermore, these institutions act in concert with social and political institutions and cannot be understood except within this context. Ultimately, the unrestrained pursuit of wealth leads to the concentration of wealth in the hands of a small number of the rich and powerful. Sustaining such outcomes within a democratic society requires radical changes in social values. Neither the spirit, nor the social values associated with capitalist society are compatible with Islam. Islamic financial institutions have practically attempted to modify the form of the institutions without affecting the spirit. Thus they end up performing the same functions as capitalist institutions and do not represent a genuine Islamic alternative.
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