Islamic Banking and Finance in the Global North: Secular Incubators, Elementary Accommodation and Strategic Negligence

Pitluck, Aaron Z. and Shikshya Adhikari. “Islamic banking and finance in the global north: Secular incubators, elementary accommodation and strategic negligence,” in Mark Woodward and Ronald Lukens-Bull (eds). Handbook of Contemporary Islam and Muslim Lives. Springer, Forthcoming

32 Pages Posted: 21 May 2018

See all articles by Aaron Z. Pitluck

Aaron Z. Pitluck

Illinois State University - Sociology

Shikshya Adhikari

State University of New York (SUNY) - Rockefeller College of Public Affairs & Policy

Date Written: May 5, 2018

Abstract

Dating from the mid-1970s, Islamic banking and finance (IBF) is an ongoing experiment to critique the conventional interest-based financial system and to construct an alternative “Sharia-compliant” industry. This chapter develops an analytic typology to describe how states respond to this project based on whether the state 1) practices industrial policy to promote the IBF industry and/or 2) whether it promotes a legislative and regulative divarication of the dominant financial market to accommodate IBF. This response can and does differ between the IBF wholesale and retail markets, and such government accommodations are more important in retail than wholesale financial markets. This chapter develops this framework to investigate the social forces promoting and inhibiting Islamic finance in Muslim-minority countries in the global North. Specifically, it argues that Islamic finance has expanded in the United Kingdom after the state moved from a position of elementary accommodation to that of a secular incubator. In contrast, only wholesale Islamic finance has flourished in Luxembourg, in part because the state continues a strategy of elementary accommodation. More pointedly, in spite of a more favorable environment than either the UK or Luxembourg, in the United States IBF has failed to take root because of the government’s position of strategic negligence.

Keywords: Islamic banking, Islamic finance, United States, United Kingdom, Luxembourg, political economy of regulation, finance and society, Muslim-minority countries

JEL Classification: Z1, Z12, Z13, P48,O57, G28, G20, A13

Suggested Citation

Pitluck, Aaron Z. and Adhikari, Shikshya, Islamic Banking and Finance in the Global North: Secular Incubators, Elementary Accommodation and Strategic Negligence (May 5, 2018). Pitluck, Aaron Z. and Shikshya Adhikari. “Islamic banking and finance in the global north: Secular incubators, elementary accommodation and strategic negligence,” in Mark Woodward and Ronald Lukens-Bull (eds). Handbook of Contemporary Islam and Muslim Lives. Springer, Forthcoming, Available at SSRN: https://ssrn.com/abstract=3174155

Aaron Z. Pitluck (Contact Author)

Illinois State University - Sociology ( email )

Campus Box 4660
Normal, IL 61790-4660
United States

Shikshya Adhikari

State University of New York (SUNY) - Rockefeller College of Public Affairs & Policy ( email )

1400 Washington Avenue
Albany, NY 12222
United States

Do you have a job opening that you would like to promote on SSRN?

Paper statistics

Downloads
41
Abstract Views
478
PlumX Metrics