Islamic Ethics in Finance

Islamic banking and finance have been very attractive features for Muslim as well as non-Muslim customers. Where a Muslim customer would investigate Shariah compliance when choosing an Islamic financial institution for its services, a non-Muslim customer prefers ethical banking as a main feature of any financial institution. This awareness of ethical banking has been a decisive factor for many customers when choosing a financial institution. Before delving into Islamic ethics in finance, the authors explore factors of production in Islamic ethics and how they differ from conventional concepts. Secondly, most important in Islamic financial ethics is that the al-Qur'an strictly forbids charging interest or riba to businesses or individual customers. This chapter focuses on reviewing the development of Islamic banking vs. conventional banking.

The Ethics of Money and Finance

This chapter gives an overview of the many compelling ethical issues and debates among moral philosophers that pertain to money in general and financial activities in particular. It gives some background by way of introducing ontological ideas about what money and finance is. Thereafter, the chapter starts by discussing some of the classic and sweeping criticisms to the effect that all (or at least most) financial activities are morally suspect, for example criticisms of usury and speculation. The following section assumes that the existence of financial markets can be acceptable and discusses some of the ethical issues involved in making them honest and fair, for example the challenges of deception and insider trading. Finally, the chapter discusses ideas to the effect that financial agents have social responsibilities that go beyond their role as market participants, for example an extended responsibility to promote social welfare. The overarching aim of the chapter is to help further establish the new field of “financial ethics.”