At an estimated size of $1 trillion, Islamic Banking and Finance is one of the world’s largest moral projects seeking to reshape economic relationships. A number of social scientists normatively invested in critiquing financialization (the distancing of credit or capital gains from real assets), exploitative banking relationships, the ontological presuppositions of conventional finance, or the existing global financial architecture have investigated Islamic Banking and Finance as a potential alternative financial system. Many are disappointed by what they discover.
Is the Islamic banking and finance (IBF) market a promising alternative to conventional finance, or merely a religious façade to market products to the pious? The paper demonstrates that the question is itself warranted. There is considerable definitional anxiety among academics, practitioners, and clients regarding how and whether IBF is substantively different than conventional finance. Indeed, I argue that powerful isomorphic social mechanisms push IBF to resemble conventional finance in numerous complex and subtle ways. Nevertheless, I argue that IBF as currently practiced remains a substantively and intellectually distinctive alternative to conventional financial organizations, instruments and practices.
Aaron Pitluck is a postdoctoral fellow specializing in global finance at the Political Economy Research Group for 2011-2013. He is also an Assistant Professor of Sociology, currently on leave from Illinois State University (USA). Previous to that appointment, he worked at the University of Konstanz (Germany) in Prof. Karin Knorr Cetina’s Research Unit on Knowledge, Finance and Society. He obtained his PhD in Sociology from the University of Wisconsin-Madison and an MPhil in Development Studies from the University of Cambridge. His most recent publication is “Distributed Execution in Illiquid Times: An Alternative Explanation of Trading in Stock Markets,” Economy and Society 40(1), 26-55. He has chapters forthcoming in the Handbook of the Sociology of Finance and the International Handbook of World-Systems Analysis.
PERG is a joint student-faculty political economy research group which brings together members from several CEU departments. It aims at fostering collaborative research among the CEU faculty and students across different departments working in the fields of international and comparative political economy, concentrating primarily, but not exclusively, on the area of Central and Eastern Europe. For more, please visit: www.ceu.hu/perg and http://pergceu.blogspot.com/.