Islamic Social Finance: Entrepreneurship, Cooperation and the Sharing Economy (Islamic Business and Finance Series)

The current dynamics of world economy show remarkable changes in the socio-economics of credit provision and entrepreneurship. If the emergence of the sharing economy is fostering innovative models of collaborative agency, networking and venture business, economic actors are also looking for a more sustainable development, able to foster profitability as well as community welfare. This book investigates Islamic social finance as a paramount example of this economy under change, where the balance between economic efficiency and social impact is contributing to the transformation of the market from an exchange- to a community-oriented institution. The collected essays analyse the social dimension of entrepreneurship from an Islamic perspective, highlighting the extent to which the rationales of "sharing," distribution and cooperation, affect the conceptualization of the market in Islam as a place of "shared prosperity." Moving from the conceptual "roots" of this paradigm to its operative "branches," the contributing authors also connect the most recent trends in the financial market to Shari‘ah-based strategies for community welfare, hence exploring the applications of Islamic social finance from the sharing economy, FinTech and crowdfunding to microcredit, waqf, zakat, sukuk and green investments. An illuminating reference for researchers, practitioners and policy-makers dealing with the challenges of a global market where not only is diversity being perceived as a value to be fostered, but also as an important opportunity for a more inclusive economy for everybody. Cover Half Title Series Information Title Page Copyright Page Table of contents Illustrations Contributors Foreword 1 Introduction: Islamic social finance and the importance of roots 1. La Grande Bellezza 2. Risk, razaqa and the ‘roots of understanding’ (usul al-fiqh) 3. Introducing this book: the meaning of ‘sharing’ in Islamic entrepreneurship (Part I of the volume) 4. Feeding the global economy on Islamic social finance (Part II) References Part I Islam, shared prosperity and the market as socio-economic community 2 From the ontology of tawhid to Islamic social finance: Conceptualization and application 1. Background, methodology and objective of this chapter 2. Part I. Grounding Islamic social finance on the unity of knowledge in Islam: an outline of the tawhidi framework ... 2.1. The current debility of Islamic economics and finance methodology 2.2. Definitions of critical terms in the epistemology of the unity (tawhid) of knowledge 2.3. Tawhid as the primal ontological law of unity of knowledge (consilience) in ‘everything’ 2.4. Deriving the unity of knowledge from the ontological law of tawhid: the wellbeing function 2.5. Evolutionary learning and sustained continuity of the IIE-processes 2.6. The tawhidi methodological worldview applied to the domain of ethical and social finance: transiting to the ... 3. Part II. Empirical method (formalism) for Islamic social and charitable financing derived from the epistemic unity ... 3.1. Interpretation of OLS statistical results Inter-variable elasticity coefficients showing their interrelated coefficients to the Islamic social financial economy 3.2. The need for data-meshing to evaluate the ethical status of Islamic economics and finance Formalism in data inter-meshing 3.3. Simulation of the wellbeing model subject to circular causation relations by the spatial domain analysis method 4. Conclusions: contribution and significance of the study Notes References 3 A critical appraisal of Islamic finance in the light of the maqasid al-Shariʿah 1. Introduction 2. The nature of Islamic finance and its relation with the maqasid al-Shariʿah 3. The maqasid al-Shariʿah as pillars and measures of human welfare (falah) 4. Differentiating the maqasid al-Shariʿah from the means to achieve the objectives 5. The objectives of Shariʿah and Islamic provisions regarding financing 5.1. Objective 1. The securing of faith (din) Sub-objective 1.1. People should follow Islam Sub-objective 1.2. Religious freedom Provisions regarding financing for the security of faith 5.2. Objective 2. The protection of life (nafs) Provisions in Islamic finance for the protection of life 5.3. Objective 3. The safeguard of intellect (ʿaql) Sub-objective 3.1. Research and exploration of the creation of Allah Sub-objective 3.2. Literacy and education Financial provisions for the safeguard of intellect 5.4. Objective 4. The security of progeny/lineage (nasl) Provisions for the security of progeny 5.5. Objective 5. Economic security: preservation of wealth (mal) Sub-objective 5.1. Legitimate income Sub-objective 5.2. Reduction in inequality Sub-objective 5.3. Reducing poverty Financial provisions for economic security of the needy 6. Islamic modes of finance, social impact and the objectives of Shariʿah 6.1. Musharakah and mudarabah 6.2. Salam and istisnaʿ 7. The prohibition of riba and its role in achieving the objectives of Shariʿah 8. Conclusions References 4 Collaborative governance, social capital and the Islamic economic organization 1. Introduction 2. Social capital and collaborative governance 3. Communities, cooperation and risk-sharing entrepreneurship 4. Communal incentives to participate in collaborative governance 5. Community failures as a collaborative governance disincentive 6. Enhancing social capital and collaborative governance effectiveness 7. Economic evolution, collaborative governance and the Islamic economic organization References 5 Experiences in Translation: Islamic finance and the sharing economy 1. ‘Translating’ the sharing economy: some clues from Eco’s Experiences 2. The ‘text’ of the sharing economy as a new ‘syntax’ for market relations 3. The sharing economy: from the ‘semantics’ of conventional capitalism to Islamic economics and finance 3.1. Conventional capitalism: ‘mine’ versus ‘yours’ 3.2. Islamic economics and finance: the ‘mine’ beside ‘yours’ of shared prosperity 4. A Shari.ah-based sharing economy in the ‘pragmatics’ of Islamic social finance and shared prosperity 5. Diversity in ‘sharing’ and the search for a global sustainable development Notes References Part II Social impact entrepreneurship: instruments and cases 6 A new form of global asset-backed debt market through sukuk 1. Introduction 2. Islamic finance briefly 3. Sukuk: nature, development and classification 4. How and why to mobilize funds via sukuk contracts as asset-backed debt instruments 4.1. Requirements for sukuk contracting 4.2. Advantages related to sukuk investments through asset-backing 5. Sukuk instruments and financial engineering 6. Some important issues in developing the Islamic finance debt market 6.1. Cost reduction in sukuk structuring 6.2. Variance of juristic interpretations and ‘fatwa shopping’ 6.3. Liquidity issues 6.4. Technology (software development and databases) in the sukuk market 7. Conclusions: asset-backed debt and economic development Notes References 7 Islamic entrepreneurship and the fundraising challenge: Unlocking capital via crowdfunding in the sharing economy 1. Introduction: private sector, social entrepreneurship and the sharing economy 2. The social dimension of entrepreneurship from an Islamic perspective 3. Entrepreneurship and the fundraising cycle 3.1. The challenge of financing 4. Islamic finance and the entrepreneurial funding challenge 5. Case studies of entrepreneurial funding based on Islamic finance 5.1. Case study 1: Zitouna Tamkeen 5.2. Case study 2: The Investment Account Platform 6. Non-banking solutions to the entrepreneurial funding challenge: the potential of crowdfunding in the sharing economy 6.1. What is crowdfunding? 6.2. When is crowdfunding required? 6.3. Islamic crowdfunding platforms 6.3.1. Donation-based crowdfunding platform (DbCFP) 6.3.2. Reward-based crowdfunding platform (RbCFP) 6.3.3. Debt-based crowdfunding platform: peer-to-peer lending (P2P lending) 6.3.4. Equity-based crowdfunding platform (EbCFP) 7. Conclusions Notes References 8 Islamic FinTech and the paradigm shift in the financial landscape 1. FinTech as paradigm shift 2. Islamic FinTech experiences and their social impact 2.1. Islamic crowdfunding and the sharing economy 2.2. FinTech zakat and waqf 2.3. Islamic wealth management 2.4. Blockchain technology applications: smart contracts, identity authentication and cryptocurrencies 2.5. The growing community of Islamic FinTech 3. Islamic FinTech: potential, open issues and the future of Islamic banking and finance Notes References 9 Islamic green finance: A new path to environmental protection and sustainable development 1. Introduction: religion, sustainability and Islamic green finance Part One – Ecology, development and the Islamic tradition 2. The global environmental concern and the Islamic answer 3. The Islamic tradition on environment: principles and institutes Part Two – Islamic economics, green finance and sustainable development 4. Reviewing the research agenda of Islamic economics: environmental protection and sustainable development as ... 4.1. Environmental and ecological economics 4.2. IE/EE: from the story of IE scholarship... 4.3. ... to a reinforced IE paradigm 5. The current practice of Islamic green finance: sukuk, awqaf and Shariʿah-compliance criteria 5.1. The global appeal of green sukuk 5.2. Green awqaf and local environmental protection 5.3. Shariʿah compliance and green economy: future prospects for global impact 6. Conclusions: the social value of Islamic green finance Notes References 10 Salam finance: Securing the purpose of microfinancing 1. The role of microfinance in poverty reduction and development: successful experiences and persistent scepticism 2. Why does microfinance fail? 3. How to manage microfinance problems? Advancing some practical solutions 4. Salam financing 5. Salam as an instrument to finance the poorest 6. Advantages of the proposed salam model, and foreseeable limits 7. Conclusions References 11 Waqf based takaful model: A challenge for entrepreneurship 1. Introduction 2. The waqf as charitable trust and its conditions of validity 3. The takaful undertaking as a tool for mutual assistance 4. The Waqf General Takaful Undertaking: advancing a waqf.../takaful combined structure 5. Discussing the proposed model 5.1. Takaful operator as waqif: essential or necessary? 5.2. Sources of funds Wakalah model and fee 5.3. The relationship between the takaful operator and the participants Conflicts of interest Multiple financing as a democratizing factor 6. Conclusions Notes Bibliography 12 Zakat: its micro-entrepreneurship model and socio-humanitarian impact 1. Introduction 2. Zakat sources, maqasid al-Shari.ah and human welfare 3. Recipients of zakat 3.1. Multi-religion destitution and zakat 4. Mechanisms and strategies for a shared development through zakat and micro-entrepreneurship 4.1. Mechanisms to promote zakat understanding 4.1.1. Diffusion of the significance of zakat 4.1.2. Waiver of misconceptions about zakat and micro-entrepreneurship 4.1.3. Implementation of zakat by complying with the maqasid al-Shariʿah 4.2. Zakat long-term micro-entrepreneurship and cooperative model 4.2.1. Cooperative micro-entrepreneurship 4.2.2. Cooperation in training, education and capacity-building 4.2.3. Group health care 4.2.4. Cooperative housing scheme 4.2.5. Immunity insolvency plan 5. Zakat funds and socio-humanitarian impact 5.1. Contemporary security system and the role of zakat 5.2. The general socio-humanitarian model grounded on zakat 6. Conclusions and final recommendations Notes References Index "The most recent dynamics of world capitalism show radical changes in the socio-economics of property management, credit provision and entrepreneurship. If on the one side the emergence of the sharing economy is fostering innovative models of collaborative agency, networking and venture business, on the other side economic actors are favouring strategies of sustainable development, with social impact investments that link profitability with community welfare and business choices that reflect personal ethical values. This book looks at Islamic finance as a paramount example of this capitalism under change, where the balance between economic efficiency and moral legitimacy is contributing to the transformation of the market from an exchange- to a person-oriented development institution. To this end, the chapters analyse the social dimension of entrepreneurship from an Islamic perspective, highlighting the extent to which the rationales of distribution and cooperation that nurture Islamic economics affect the conceptualization of the market from an ethical stance. Moving from a theoretical to an operative approach, the contributing authors investigate the instruments that Islamic finance offers for social impact investments and the sharing economy, connecting current trends in the financial market to shari'ah-compliant strategies for local and community development. By contextualizing Islamic finance within the transformative nature of contemporary capitalism, the book provides an illuminating reference for researchers, practitioners and policy-makers dealing with the challenges of a global market where not only is diversity being perceived as a value to be fostered, but also as an important opportunity for a more inclusive economy for everybody."--Provided by publisher