19 February 2013
Could religion have stopped the Global Financial Crisis (GFC)? Could an ethics-based financial system be the key to preventing similar financial crises in the future?
In the first University of South Australia Knowledge Works lecture of the year, Professor Mervyn Lewis will explore the ins and outs of the religious-based Islamic finance and banking, which experienced unprecedented growth at a time when conventional banking crashed during the GFC.
Prof Lewis will share the secrets to the recent success of Islamic financial institutions and shed light on the religion that underpins the entire system at the free public lecture being held at UniSA’s City West campus on February 26.
“Islamic finance nearly doubled in size from US $600 billion in 2007 to about $1.2 trillion in 2010,” Prof Lewis says.
“Islamic banks did not engage in the risky activities of conventional banks and did not experience a massive decline in share value during the time many conventional banks crumbled.
“Unlike conventional banking, Islamic finance is a religious-based, ethical system of finance. Islam plays a central role with the rules and principles derived from the Holy Qur’an. At its core, Islamic finance is based on the principle that economic and financial activities cannot be separated from ethics and morality.
“This poses the question: might the crisis have been avoided if religious precepts had been followed? While the GFC has been described as the first crisis of globalisation, from the viewpoint of Islam the GFC could be seen as the first post-World War II recession that has its roots in widespread moral failure.”
Through a careful examination of Islam and shari’a (Islamic) law, Prof Lewis will detail how Islamic finance operates and explain why the Islamic system could potentially offer a viable and ethical alternative to conventional banking.
Prof Lewis explains that while the two financial systems share some similarities, they remain fundamentally different. Furthermore despite Islamic finance’s impressive growth recently, it remains comparatively small to its conventional finance counterparts.
“Islamic finance and banking is seen as a safer option than conventional banks, a place where one can obtain a form of ethical investment,” Prof Lewis says.
“In Islamic finance, there is no interest as such paid or charged, but a sharing of profits. Speculation is prohibited, there must be full certainty of contracts and bank activities are overseen by religious scholars.
“While at a global level, Islamic finance is still very much smaller than conventional finance, Islamic finance has a strong presence in the Middle East and other locations are growing strongly, particularly with some of Australia’s close neighbours such as Indonesia and Malaysia.
“While non-Muslims can and do already participate in Islamic finance, activities that go against shari’a such as gambling, alcohol, pork production and prostitution cannot be financed, which will naturally add a complex dimension in countries like Australia.”
The lecture, The rise of Islamic finance: what is it, how does it work and, what is driving the boom? will be held at the Allan Scott Auditorium, North Terrace, City West campus on Tuesday February 26, 6-7pm.
To find out more and register to attend, head to www.unisa.edu.au/knowledgeworks
Media Contact
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