Economy in practice: Islamic finance and the problem of market reason

Abstract

Proponents of Islamic finance are working to make Kuala Lumpur the “New York of the Muslim World”: the central node in a global Islamic alternative to the conventional financial system. Amidst this ambitious project, I document how Islamic finance experts represent economic rationality as an object of reflection and I examine their responses to the economism intrinsic to market reason. Islamic finance is not wholly opposed to economic rationality, but the market calculations endemic to what experts term “conventional finance” serve as an unavoidable point of reference, comparison, and differentiation. I refer to reflection on economic rationality as “economy in practice,” a conceptualization that seeks to illuminate the various techniques through which humans are made economic subjects.

Islamic Finance and the Afterlives of Development in Malaysia

“…In Malaysia today, the selection of a financial services firm entails new decision making for the country's Muslim citizens, as banking becomes a potent site for moral action. The increasing proliferation of Islamic finance turns financial decisions, whether they involve obtaining a home loan or opening a savings account, into questions that cannot be addressed merely in terms of cost‐benefit analysis or profit and loss (Rudnyckyj ). Rather, for those who take the Qur'anic injunction against interest seriously, financial action becomes a site for the potential enactment of a religious identity and pious duties.…”

Unraveling risk and return in Islamic banking:does the perceived high return exist

“…Malaysia has been selected as a sample for this study because Malaysia was a forerunner in incubating Islamic finance in Southeast Asia and also because of the phenomenal growth of Islamic banks in Malaysia as compared to other countries (Venardos 2006 Islamic finance between bankers, lawyers and jurists, we argue that our qualitative data is necessary for interpreting the anomalies in our quantitative analysis. In this division of labor bankers seek an efficient allocation of their resources and good return for their partners by synthesizing or reengineering shariah compliant products; lawyers help to take these products to market by ensuring that the product is compatible with conventional regulatory systems, by making the products as similar as possible to conventional ones, and explaining the Islamic structure to regulators; and jurists represent an Islamic moral framework by assigning contract categories and status, and by performing informal marketing functions through networking (El-Gamal 2006;Rudnyckyj 2014). Because this division of labor mirrors that of the financial regime globally, particularly with regard to self-regulation in the banking industry and the retention of proprietary models for evaluating risk (Helleiner 2009;Porter 2009;Strange 2004;Tabb 2004;Tooze and May 2002), we believe that qualitative analysis is necessary to disambiguate the differences between conventional and Islamic banking returns.…”

Capital market development in Southeast Asia: From speculative crisis to spectacles of financialization

“…With a few exceptions, this work has focused on capital markets in advanced industrialized countries (but see, inter alia, Lagerwaard ; Rudnyckyj , ). Consequently, the relationship between expanding capital markets, financialization, and state transformation in emerging‐market societies—with all the ambiguities that throwing together notions of “emergence,” “market,” and “society” entails—remains underresearched.…”