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The impact of the financial crisis on the global economy: can the Islamic financial system help?

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  • Mohamed Ali Trabelsi

Abstract

Purpose - The aim of this paper is to analyse the different measures taken by the G7 and G20 leaders to face the current global financial crisis and to show whether such decisions represent a return to protectionism. Design/methodology/approach - The paper proposes the introduction of a new economic system based on Islamic banks' principle which calls for cancelling interests. This line of thinking might solve speculation problems and put this type of crisis to an end. Findings - This financial crisis pushed most developed countries to lower their banking rates and to implement null‐approximating interest rates, a move which replicates the principle adopted by Islamic banks. Originality/value - The paper represents a point of view on the financial crisis, the return to protectionism and the role of Islamic banking.

Suggested Citation

  • Mohamed Ali Trabelsi, 2011. "The impact of the financial crisis on the global economy: can the Islamic financial system help?," Journal of Risk Finance, Emerald Group Publishing Limited, vol. 12(1), pages 15-25, January.
    • Handle: RePEc:eme:jrfpps:15265941111100049
    DOI: 10.1108/15265941111100049
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    References listed on IDEAS

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    1. Abul Hassan, 2009. "Risk management practices of Islamic banks of Brunei Darussalam," Journal of Risk Finance, Emerald Group Publishing, vol. 10(1), pages 23-37, January.
    2. Paul S. Mills & John R. Presley, 1999. "Islamic Finance: Theory and Practice," Palgrave Macmillan Books, Palgrave Macmillan, number 978-0-230-28847-8, December.
    3. M. Mansoor Khan & M. Ishaq Bhatti, 2008. "Development in Islamic banking: a financial risk-allocation approach," Journal of Risk Finance, Emerald Group Publishing, vol. 9(1), pages 40-51, January.
    4. M. Mansoor Khan & M. Ishaq Bhatti, 2008. "Development in Islamic banking: a financial risk‐allocation approach," Journal of Risk Finance, Emerald Group Publishing Limited, vol. 9(1), pages 40-51, January.
    5. Mohammad Mansoor Khan & Muhammad Ishaq Bhatti, 2008. "Conceptual Developments in Islamic Banking and Finance in Pakistan (1977–1980)," Palgrave Macmillan Studies in Banking and Financial Institutions, in: Developments in Islamic Banking, chapter 4, pages 77-105, Palgrave Macmillan.
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    Cited by:

    1. Mohamed Ali Trabelsi & Naoufel Liouane, 2013. "Trade Liberalization and Fight Against Poverty," International Journal of Economics and Financial Issues, Econjournals, vol. 3(2), pages 370-375.
    2. Liu Hongfei & Tian Guang & Kathy Tian, 2018. "Super Strong Versus Group Strong Countries: China’s Role in Development and Changing World Pattern," Global Journal of Emerging Market Economies, Emerging Markets Forum, vol. 10(1-3), pages 39-51, January.
    3. Mohamed Trabelsi, 2013. "Post-Political Transitions in Arab Spring Countries: The Challenges," Transition Studies Review, Springer;Central Eastern European University Network (CEEUN), vol. 20(2), pages 253-263, October.
    4. Amina Hachimi & M. My Abdelouhab Salahddine, 2019. "The Acceptability of Participatory Banking Products by SMES: A Conceptual Framework," International Journal of Economics and Financial Issues, Econjournals, vol. 9(4), pages 259-266.
    5. Burhan Ali Shah & Ghulam Shabbir Khan Niazi & Abdul Majid, 2016. "Employees' Perceptions about Islamic Banking and its Growth Potential in Pakistan," Business & Economic Review, Institute of Management Sciences, Peshawar, Pakistan, vol. 8(1), pages 53-76, April.
    6. Qin, Meng & Su, Chi-Wei & Hao, Lin-Na & Tao, Ran, 2020. "The stability of U.S. economic policy: Does it really matter for oil price?," Energy, Elsevier, vol. 198(C).
    7. Mohamed Ali Trabelsi, 2011. "The Euro-Zone; is it the crisis ahead!," EuroEconomica, Danubius University of Galati, issue 28, pages 7-13, May.
    8. Ascarya Ascarya & Ugi Suharto & Jardine A. Husman, 2022. "Proposed model of integrated Islamic commercial and social finance for Islamic bank in Indonesia," Eurasian Economic Review, Springer;Eurasia Business and Economics Society, vol. 12(1), pages 115-138, March.
    9. Trabelsi, Mohamed Ali, 2013. "L’islamisme Politique : Echec de Gouvernance et Chute Inévitable [Political Islamism: Failure of Governance and Inevitable Fall]," MPRA Paper 77026, University Library of Munich, Germany, revised 2013.
    10. Rashidah Abdul Rahman & Siti Balqis Noor & Tariq Ismail, 2013. "Governance and Risk Management: Empirical Evidence from Malaysia and Egypt," International Journal of Finance & Banking Studies, Center for the Strategic Studies in Business and Finance, vol. 2(3), pages 21-33, July.
    11. Nurrachmi, Rininta, 2018. "Movements of Islamic Stock Indices in Selected OIC Countries," MPRA Paper 96539, University Library of Munich, Germany.
    12. Trad, Naama & Trabelsi, Mohamed Ali & Goux, Jean François, 2017. "Risk And Profi Tability Of Islamic Banks: A Religious Deception Or An Alternative Solution?," European Research on Management and Business Economics (ERMBE), Academia Europea de Dirección y Economía de la Empresa (AEDEM), vol. 23(1), pages 40-45.
    13. Mohamed Ali Trabelsi & Naama Trad, 2017. "Profitability and risk in interest-free banking industries: a dynamic panel data analysis," International Journal of Islamic and Middle Eastern Finance and Management, Emerald Group Publishing Limited, vol. 10(4), pages 454-469, October.
    14. Marwa Sallemi & Salah Ben Hamad & Nejla Ould Daoud Ellili, 2023. "Impact of board of directors on insolvency risk: which role of the corruption control? Evidence from OECD banks," Review of Managerial Science, Springer, vol. 17(8), pages 2831-2868, November.
    15. Umar, Zaghum & Riaz, Yasir & Shahab, Yasir & Teplova, Tamara, 2023. "Network connectedness of the term structure of yield curve and global Sukuks," Pacific-Basin Finance Journal, Elsevier, vol. 80(C).
    16. Rachdi Houssem & Trabelsi Mohamed Ali & Trad Naama, 2013. "Banking Governance and Risk: The Case of Tunisian Conventional Banks," Review of Economic Perspectives, Sciendo, vol. 13(4), pages 195-206, December.
    17. Trabelsi, Mohamed Ali, 2012. "The Impact of The Sovereign Debt Crisis on The Eurozone Countries," MPRA Paper 76974, University Library of Munich, Germany, revised 2012.
    18. Trabelsi, Mohamed Ali, 2013. "L’islamisme Politique : Echec de Gouvernance et Chute Inévitable [Political Islamism: Failure of Governance and Inevitable Fall]," MPRA Paper 80347, University Library of Munich, Germany, revised 2013.
    19. Ascarya & Ugi Suharto, 2021. "Integrated Islamic Social and Commercial Finance to Achieve SDGs," Springer Books, in: Mohd Ma'Sum Billah (ed.), Islamic Wealth and the SDGs, chapter 0, pages 105-127, Springer.

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    More about this item

    Keywords

    Finance; Protectionism; Islam; Banking; World economy;
    All these keywords.

    JEL classification:

    • E58 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Central Banks and Their Policies
    • F41 - International Economics - - Macroeconomic Aspects of International Trade and Finance - - - Open Economy Macroeconomics
    • G15 - Financial Economics - - General Financial Markets - - - International Financial Markets
    • P16 - Political Economy and Comparative Economic Systems - - Capitalist Economies - - - Capitalist Institutions; Welfare State
    • Z12 - Other Special Topics - - Cultural Economics - - - Religion

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