Wednesday's Read: Islamic Finance: Law, Economics, and Practice

 el-Gamal, Mahmoud A. Islamic Finance: Law, Economics, and Practice. (Cambridge: Cambridge UP, 2006)


As I read Mahmoud el-Gamal's (absolutely superb) introduction to his Islamic Finance (2006), I found myself wanting to quote whole paragraphs of text. Of the books I have read thus far in my exploration of Islamic finance, this is the one I would recommend to novices: it is concisely written in flowing, accessible prose, and it quickly and clearly addresses many of the main questions that a student would bring to the table. What are the fundamental differences between Islamic finance and mainstream global finance? How does it operate as a niche market? What are its drawbacks? How does Shari'ah compliance work, in practical terms? Are there differences between Sunni and Shi'i approaches to Islamicity, and how do these difference affect global markets? How does Shari'ah law tally with European common law and civil law? etc.

el-Gamal, who holds a doctorate in economics, teaches locally at Rice University in Texas, and keeps a blog that addresses his personal thoughts on Islam and economics:

http://elgamal.blogspot.com/

He introduces the subject of Islamic banking with an oft-cited industry joke: when it comes to Islamicity, or “Shari’ah compliance,” it is not the devil, but God who “is in the details.” The majority of financial instruments that are certified by the jurists on Shar’iah boards are not markedly distinct from their non-certified industry counterparts. Instead, subtle shifts in the way that the instruments are conceptualized and formalized are what earns the mark of approval. El-Gamal explains in detail the differences between, for example, a shari’ah compliant mortgage and a standard mortgage, and notes that a great deal of the substance of Islamic markets is, in fact, in PR and, well, marketing.