Recent business history has demonstrated beyond any hesitation that splitting up businesses from ethics run huge risks and latest Global Financial Crisis (GFC) is the attestation of such massive jeopardy. The repercussion of unethical lending practices of major institutional providers devastated the United States financial markets and eventually all major world markets during the second half of 2008. Most of the world’s leading economies are still filling that pain. So, global financial market collapse is the testimony to both the unethical behaviors of the businesses based on greed, hubris, corruption and poor corporate governance within the financial sectors as well as the intimate inter-relationship between and among nations through globalization.
Actually, emphasizing on the wealth maximization of the shareholder deliberately neglects the perception of ethics and its long term shock on the value of the organisation. Moreover, various corporate misdeeds founded on the lack of corporate governance eroded the public trust of business leaders and their organisations, which eventually caused the biggest financial crisis since the great depression. In addition, globalisation which refers to the integration of national economies, especially their financial sectors, greatly increased the intensity of the GFC because of its capability to transmit an impulse arising in one country around the world very rapidly.
According to Al-Suhaibani and Naifar(2014), all the recent financial crises are, in principle, debt crises. As the Islamic finance is offering the provision of avoiding debt-creating flows and the opportunity of adopting such a financing systems that are found on ‘risk-sharing’, rather than ‘risk-shifting’, the demand for Islamic finance is growing rapidly throughout the whole world. Therefore, Aribi(2015) appropriately mentions that the Islamic financial systems are a fast-growing segment of the global finance industry, and posturing challenges to the ways that current financial institutions are received and expected around the world. In the last 15 years, Islamic finance around the world has consistently been recording double-digit annual growth rates not only within but also outside of Muslim economies (Fang & Foucart, 2014). Thus, the signs of growing demand for ethical finance across the world are clearly observable and the people are showing curiosity for such sustainable ethical economic development irrespective of their religious or ethnical background.
Al-Suhaibani, M., & Naifar, N. (2014). Islamic Corporate Governance: Risk-Sharing and Islamic Preferred Shares. Journal of Business Ethics, 124, 623-632.
Aribi, Z. A., & Arun, T. (2015). Corporate Social Responsibility and Islamic Financial Institutions (IFIs): Management Perceptions from IFIs in Bahrain. Journal of Business Ethics, 129, 785-794.
Fang, E. S., & Foucart, R. (2014). Western Financial Agents and Islamic Ethics. Journal of Business Ethics, 123, 475-491.