Is Time Ripe to Adopt Islamic Financial Systems in Secular Developing Countries? A Review of Literature

Byson Beracah Majanga
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§ University of Malawi-The Polytechnic

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Is Time Ripe to Adopt Islamic Financial Systems in Secular Developing Countries? A Review of Literature

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Abstract

The global financial crisis of 2007/8 is considered to be the worst after the 1930 Great Depression. Most finance scholars argue that the crisis was a sole result of the weaknesses of the interest related traditional or conventional banking system commonly used in almost all countries in the world. Islamic finance scholars contend that the crises would have been avoided, and that will never be experienced, if the world adopted Islamic banking principles rather than clinging on to the conventional banking systems. Since Islamic financial systems are linked to, and associated with the principles of Islamic religion, other scholars maintain that the conventional systems remain the best as they accommodate all persons without being aligned to the principles of a particular religion. That aside, studies show that Islamic banking has registered a reasonable growth in asset base, especially in the Islamic nations and efforts are still there to break into the economies which are non Islamic. This study analyses the basic principles of Islamic banking in comparison with the conventional systems, and looks at the challenges and opportunities that may arise in an economy when the two systems run and operate concurrently. The paper concludes that much as the two systems can complement each other in a nation, the respective regulators must weigh the benefits and costs arising from an involvement of a new banking system in an economy. The paper further provides room for further research on the subject matter on the basis of individual country’s regulations regarding its financial systems.

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Funding

No external funding was declared for this work.

Conflict of Interest

The authors declare no conflict of interest.

Ethical Approval

No ethics committee approval was required for this article type.

Data Availability

Not applicable for this article.

How to Cite This Article

Byson Beracah Majanga. 2015. "Is Time Ripe to Adopt Islamic Financial Systems in Secular Developing Countries? A Review of Literature". Global Journal of Management and Business Research - B: Economic & Commerce GJMBR-B Volume 15 (GJMBR Volume 15 Issue B8).

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Journal Specifications

Crossref Journal DOI 10.17406/GJMBR

Print ISSN 0975-5853

e-ISSN 2249-4588

Keywords
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Classification
GJMBR-B Classification JEL Code: F00
  • Submission ReceivedFebruary 6, 2015
  • Peer Review Double Blind
    Handling Editor
  • Accepted March 4, 2015
  • Published March 15, 2015
Version of record

v1.2

Issue date
October 8, 2015

Language
English
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Is Time Ripe to Adopt Islamic Financial Systems in Secular Developing Countries? A Review of Literature

Byson Majanga
Byson Majanga University of Malawi-The Polytechnic
  • Submission ReceivedFebruary 6, 2015
  • Peer Review Double Blind
    Handling Editor
  • Accepted March 4, 2015
  • Published March 15, 2015