Risk Sharing in Finance: The Islamic Finance Alternative

The recent world financial crisis has led to major trepidation over risk management in conventional financial systems. Adopting an Islamic financial system could end these worries. Islamic finance is based on principals of equitable and just risk sharing. By implementing a wider reliance on risk sharing, governments can create a stable, vibrant economy. For example, governments could issue shares to finance development projects, and place limits on short sales and leveraging. Islamic finance is a promising potential tool for financial reform.