Financial Institutions

Objectives of Financial Institutions – Western & Islamic

Asad Zaman (Dec 2015) “Objectives of Financial Institutions: Western and Islamic”, Journal of Islamic Business and Management, Vol 5, No. 2,p43-68.

JIBM Link to Vol 5 No 2 Article 2 Dec 2015

Main Page on Building Genuine Financial Institutions: bit.do/bgifi

Post-Conference reflections after CILE Conference at Doha, Qatar, 10-12 June, 2014, by Dr. Asad Zaman -- paper presented at conference was entitled: Building Genuine Islamic Financial Istitutions.

Posted on SSRN: http://ssrn.com/abstract=2496960 V/D: 39/12 -- 7 Dec 2014

See Also; MINI COURSE ON MACRO ECONOMICS: This provides further detailed explanation of how finance and money work, and how interest based debt causes serious damages to the system.

Submitted to JIBM: Journal of Islamic Business and Management, Riphah University, on 7 Dec 2014

Center for Islamic Legislation and Ethics Seminar on Ethics & Economics: Conference Question 1:What are the main objectives of financial institutions in the current neoliberal economic system in relation to the individual, society, state and global economy?

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. 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 collection 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 attempt 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.

Contents

1. INTRODUCTION.. 2

2. The Spirit and The Flesh.. 2

2.1 Three Authors. 2

2.2 A Radical Revolution.. 3

2.3 The Conflict Between Markets and Society.. 4

3. Financial Institutions: Mechanisms & Spirits. 5

3.1 Pursuit of Wealth.. 5

3.2 Functions of Banks. 6

4. (False) Theories Needed to Sustain Market Society. 7

4.1 Re-interpretation of Religion.. 8

4.2 Popularizing Concentration of Wealth.. 8

4.3 Re-Defining Morality.. 9

5. Institutional Mechanisms for the Vacuum Cleaner. 11

5.1 Subversion of Democracy.. 11

5.2 Popularizing Consumerism... 13

5.3 Financial Institutions. 14

6. IMPACT ON SOCIETY AND INDIVIDUALS: 15

6.1 Life in the Jungle. 15

6.2 Arrested Spiritual Development. 16

6.3 EVERYTHING FOR SALE SOCIETIES. 17

7. Islamic Finance. 18

7.1 Shock-and-Awe: All things west admires are islamic. 18

7.2 Islam Versus Economics. 19

7.3 The Failure of Banks. 19

8. Conclusions. 21