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Islamic Alternatives to Purely Capitalist Modes of Finance: A Study of Malaysian Banks from 1999 to 2006

Author

Listed:
  • Tamer ElGindi

    (tamerelgindi@gmail.com)

  • Mona Said

    (Department of Economics, The American University in Cairo, 113 Kasr el Aini Street, Cairo, 11511, Egypt, mona_said@aucegypt.edu)

  • John William Salevurakis

    (Department of Economics, The American University in Cairo, 113 Kasr el Aini Street, Cairo, 11511, Egypt, jalevurakis@aucegypt.edu)

Abstract

Like Western financial markets, Islamic modes of finance offer services characterized by profit-and-loss sharing while also providing certain debt-based instruments. Unlike traditional capitalist modes of finance, however, Islamic finance places a unique emphasis upon the former, thus prompting many comparisons between the performance of Islamic banks and conventional ones. Given the mixed results of these studies, our paper analyzes eight banks in Malaysia offering both conventional and Islamic banking operations. Our comparison is conducted via discussions of profitability, liquidity, and asset quality. It is illustrated via this micro-level analysis that Islamic modes of finance may generally equal or surpass the quantitative measures of performance describing traditional capitalist finance systems and simultaneously encourage higher levels of social equity and economic stability in the era of financialization. JEL classification: B25, D33, D63, E44, N25

Suggested Citation

  • Tamer ElGindi & Mona Said & John William Salevurakis, 2009. "Islamic Alternatives to Purely Capitalist Modes of Finance: A Study of Malaysian Banks from 1999 to 2006," Review of Radical Political Economics, Union for Radical Political Economics, vol. 41(4), pages 516-538, December.
    • Handle: RePEc:sae:reorpe:v:41:y:2009:i:4:p:516-538
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    Citations

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    Cited by:

    1. Reazul Islam & Rubi Ahmad, 2020. "Applicability of Mudarabah and Musharakah as Islamic Micro-equity Finance to Underprivileged Women in Malaysia," The European Journal of Development Research, Palgrave Macmillan;European Association of Development Research and Training Institutes (EADI), vol. 32(1), pages 176-197, January.
    2. Franziska Wolf & Munirul H. Nabin & Sukanto Bhattacharya, 2018. "A Mathematical Demonstration of the Viability of Profit/Loss Sharing as a Debt Alternative in Presence of Market Frictions," Journal of Emerging Market Finance, Institute for Financial Management and Research, vol. 17(3_suppl), pages 327-343, December.

    More about this item

    Keywords

    islamic finance; social equity; Malaysia; bank performance;
    All these keywords.

    JEL classification:

    • B25 - Schools of Economic Thought and Methodology - - History of Economic Thought since 1925 - - - Historical; Institutional; Evolutionary; Austrian; Stockholm School
    • D33 - Microeconomics - - Distribution - - - Factor Income Distribution
    • D63 - Microeconomics - - Welfare Economics - - - Equity, Justice, Inequality, and Other Normative Criteria and Measurement
    • E44 - Macroeconomics and Monetary Economics - - Money and Interest Rates - - - Financial Markets and the Macroeconomy
    • N25 - Economic History - - Financial Markets and Institutions - - - Asia including Middle East

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