The Stability of Islamic Finance: Creating a Resilient Financial Environment for a Secure Future

Argues that the basis of Islamic finance upon equity financing and risk sharing creates an industry inherently more stable than conventional financial systems. For example, conventional financial systems open themselves up to instability by transmitting interest rates, speculation, capital flows, and international credit default swaps and acquisition of toxic assets. On the other hand, the reliance by Islamic finance on equity and risk sharing create a long-term financial system not bound by debt or volatile interest rates and that more closely binds the financial and real sectors to one another. This procedure should be considered and implemented for the conventional Western finance as a reform in light of the recent global economic crisis.