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Does Islamic Sustainable Finance Support Sustainable Development Goals to Avert Financial Risk in the Management of Islamic Finance Products? A Critical Literature Review

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Listed:
  • Lukman Raimi

    (Department of Business Administration (Entrepreneurship), Universiti Brunei Darussalam, Jalan Tungku Link, Gadong BE1410, Brunei)

  • Ibrahim Adeniyi Abdur-Rauf

    (Department of Shari’ah, Universiti Sultan Zainal Abidin, Terengganu 21300, Malaysia)

  • Saheed Afolabi Ashafa

    (Department of Religions, Osun State University, Osogbo 210001, Nigeria)

Abstract

Policymakers, governments, and Islamic financial institutions are increasingly focusing on sustainable development, leading to an in-depth examination of current sustainable finance practices, projects, and product portfolios. This study examines the role of Islamic sustainable finance (ISF) in promoting Sustainable Development Goals (SDGs) to avert financial risk in the management of Islamic Finance Products (ISFP). Through qualitative analysis, the study conducts a critical literature review (CLR) that incorporates conceptual, theoretical, and empirical perspectives on ISF and SDGs and addresses two specific research questions. Our study examines over 48 journals from 2010 to 2024 and provides insights into how ISF advances the SDGs across all environmental, social, and economic dimensions. It also highlights that ISF promotes green entrepreneurship by investing in sustainable projects, supporting SMEs, and offering alternative financing. ISF also promotes financial stability, justice, and growth and is consistent with the principles of Maqasid al-Shari’ah. Key ISF mechanisms that promote the SDGs include Islamic Green Sukuk, Socially Responsible Investment Funds, Islamic Microfinance, and Islamic Impact Investing. Integrating Islamic ethical principles into financial activities is crucial for inclusive and sustainable economic development. These qualitative insights are critical for policymakers, Islamic financial institutions, Halal entrepreneurs, environmentalists, and investors to understand the potential of Islamic social finance (ISF) to support sustainable practices, projects, and portfolios. Furthermore, the ISFs alignment with Maqasid al-Shari’ah highlights its importance in promoting sustainable development while mitigating financial risk in ISFPs management. The study offers robust contributions to the existing literature to provide comprehensive insights into how ISF can be effectively used to promote SDGs.

Suggested Citation

  • Lukman Raimi & Ibrahim Adeniyi Abdur-Rauf & Saheed Afolabi Ashafa, 2024. "Does Islamic Sustainable Finance Support Sustainable Development Goals to Avert Financial Risk in the Management of Islamic Finance Products? A Critical Literature Review," JRFM, MDPI, vol. 17(6), pages 1-15, June.
    • Handle: RePEc:gam:jjrfmx:v:17:y:2024:i:6:p:236-:d:1410093
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    References listed on IDEAS

    as
    1. Buerhan Saiti & Adama Dembele & Mehmet Bulut, 2021. "The global cashwaqf: a tool against poverty in Muslim countries," Qualitative Research in Financial Markets, Emerald Group Publishing Limited, vol. 13(3), pages 277-294, February.
    2. Felicia HM Liu & Karen PY Lai, 2021. "Ecologies of green finance: Green sukuk and development of green Islamic finance in Malaysia," Environment and Planning A, , vol. 53(8), pages 1896-1914, November.
    3. repec:eme:hppsss:v:31:y:2015:i:3:p:272-298 is not listed on IDEAS
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