Islamic Banking and Finance and Its Role in the GCC-EU Relationship: Principles, Developments and the Bridge Role of Islamic Finance


Dear My Weblog Readers,

Considering the importance of understanding Islamic Political Economy or Islamic Moral Economy, I would like to share with you a very interesting and illuminating article by Mehmet Asutay on the topic. This piece enlightens us about the role of Islamic finance from political economy perspective. Asutay employs the term ‘multiple modernities’ framework to explain how Islamic finance can play its role as a cultural and political bridge between the west and Muslims world.

For full article click here: Islamic Banking and Finance and Its Role in the GCC-EU Relationship

Islamic ontology and epistemology, the sources of IBF, have always been considered beyond the ‘universal truth’ of the modernity project, which assumed that the world will converge towards the Eurocentric definition of a homogenous civilization. Therefore, causality of knowledge transfer and development is always considered to be from the West to the ‘rest.’ However, realities demonstrate that
this has not been possible, nor will it be in the future.

Take the example of IBF, an institution based on the different ontology and epistemology of Islam, which entered into the ‘rational’ legal and regulative environment of Europe. In this case,modernity is re-produced by the ‘other’, here by Islam, in the form of an alternative modernity. IBF borrows the institutions of the ‘modernity’ and therefore ‘Islamises the products and institutions of modernity’ with its own ontology and epistemology, creating ‘multiple modernities.’

IBF, thus, is not post-modern, but rather modern as it endogenizes or ‘Islamises’ the institutional and methodological framework of modern ‘conventional’ banking, rather than creating its own authentic institutions and operations (the latter strategy would have produced alternative institutions and hence would have been considered as post-modern). Thus, two different moderns exist together within the ‘multiple modernities’ framework.

This, of course, represents a convergence between the two worlds, as the Muslim world has been practising the ‘modern’ for many decades, and now through IBF, Europe is experiencing the alternative form of modern or ‘Islamic’ modern.

(Asutay, M. (2010). Islamic Banking and Finance and Its Role in the GCC-EU Relationship: Principles, Developments and the Bridge Role of Islamic Finance, in Koch, C and Stenberg, L. (Ed.) The EU and the GCC: Challenges and Prospects under the Swedish EU Presidency. Dubai: Gulf Research Centre).

Best Regards

  • With Dr. Mehmet Asutay at Srebrenica, Bosnia and Herzegovina

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