Revitalization of the Traditional Islamic Economic Institutions (Waqf and Zakat) in the Twenty-first Century: Resuscitation of the Antique Economic System or Novel Sustainable System?

The rapid growth of Islamic finance after 2000 has led to a new question of its practice. Critics of the current situation of Islamic finance contend that the newly developed Islamic financial products are not compatible with the ideal of Islamic economics, because these products are approved at patchwork screenings by a Sharia advisory board. After the middle of the first decade of the twenty-first century, in order to overcome this situation, several new ideas were proposed by those who aspire to the ideal of Islamic economics. First, they try to exploit the new areas of the practice of Islamic finance, where conventional finance could not ensure enough service or could cause negative effects. They focuses on microfinance lending and socially responsible investment (SRI) as concrete areas for applying Islamic finance. Second they recently focused on traditional Islamic economic institutions like waqf and zakat. The practices of these institutions are still alive in the contemporary Islamic world, although they are getting scarce in many regions. They are trying to activate these institutions using the scheme of Islamic finance, tapping a new market. This paper identifies new trends in Islamic finance and considers the characteristics of the trends and their historical implications. In particular, it examines whether this revitalization can be regarded as the resuscitation of the antique Islamic economic system or the emergence of a novel system.