Towards A New Theory Of Fınance: Can Islamıc Fınance Be It?

This book is an attempt to discover a new theory ıf financial intermediation that  restores  to  the  financial  sector  and  financial  institutions  their  original function,  and  prevents  them  from  causing  crises  in  the  real  market.  The suggested reform in financial intermediation would propose making financial intermediaries support the real sector of production and exchance instead of trading financial assets and derivatives.

The proposed reform is inspired from the principles of Islamic finance, which require finance to utilize sale, lease, and sharing contracts, and avoid playing with  debts’  trading  and  virtual  financing.  If  all  the  financial  activities  are rechanneled throught such contracts, the whole economy’s saving and credit creation  would  only  be  available  to  increase  the  amount  of  added  value created  in  the  production  and  Exchange  sectors.  It  would  also  maket  he banking  activities  the  main  focus  and  the  only  task  performed  by  the financial institutions and financial sector.

The  adoption  of  the  Islamic  finance  methodology  would  make  financial activities  socially  and  environmentally  friendly,  in  addition  to  being devolopmentally‐oriented.  It  will  also  re‐ad‐dress  the  allocation  of  human and financial resources from derivaties and trading of debt to the real market in the  form of  finance and human talent availability  for research and actual increase in the output of the real sector.

We  present  this  book  with  the  hope  that  it  will  make  a  real  difference  in changing the direction of finance and economies around the world.

All the 21 chapters are contributed by a selected team of my Ph.D. students.