The Impact of the COVID-19 Pandemic on Islamic Finance: The Lessons Learned and the Way Forward

Abstract

This chapter explores the impact of the pandemic on Islamic commercial finance and Islamic social finance in a comprehensive manner. The chapter reveals that COVID-19 has provided more opportunities to Islamic social finance than Islamic commercial finance. The beauty of Islamic finance in this regard is reflected as the perception that Islamic finance does not achieve its objective as being a social finance is proved to be false as Islamic finance not only promotes profit maximization, but it has also the potential to achieve social objectives. Islamic commercial finance developments could be slower, but it is anticipated that Islamic social modes of financing will be used widely even by multilateral agencies to assist the communities who need help in this pandemic. The most important lesson one could learn from this pandemic in relation to Islamic finance is that Islamic finance is truly different from conventional finance and as such, it needs a unique legal, regulatory and governance framework to display the true potential of it.

Citation

Hassan, M.K., Muneeza, A. and Sarea, A.M. (2022), "The Impact of the COVID-19 Pandemic on Islamic Finance: The Lessons Learned and the Way Forward", Hassan, M.K., Muneeza, A. and Sarea, A.M. (Ed.) Towards a Post-Covid Global Financial System, Emerald Publishing Limited, Leeds, pp. 15-36. https://doi.org/10.1108/978-1-80071-625-420210001