THE ROLE OF SUSTAINABLE FINANCE IN PROMOTING ECONOMIC AND SOCIAL DEVELOPMENT ON ISLAMIC BANKS

• Hussein Ali Saad Alsrai

  Department of Persian Language, College of Arts, University of Wasit, Iraq

Islamic financial organizations, which work in agreement with Sharia law, assimilate financial innovation with social accountability in instruction to challenge global issues relating to sustainability and inclusivity. This academic article explores the means in which Islamic banks ease economic and social progression done performs of sustainable finance. Finished a proportional analysis of the financial crops providing by Islamic banks and their conservative complements, the study clarifies the important role played by Islamic financial institutions in development long-term economic growth, justifying differences, and indorsing social wellbeing. Also, the study inspects the distinctive physiognomies of Islamic banking, counting the exclusion of interest and the ordering of moral investment, and evaluates their possible to challenge expansion trials within the MENA region. The study achieves with references aimed at supplementing the bulk of Islamic banks to further donate to economic and social expansion, in al Islamic financial determined with global sustainability objectives.

. I. Hasan and T. Risfandy, "Islamic Banks’ Stability: Full-Fledged vs Islamic Windows," Journal of Accounting and Investment, vol. 22, no. 1, pp. 192-205, Jan. 2021. Available: semanticscholar.org

. S. Issa, "Life after Debt: The Effects of Overleveraging on Conventional and Islamic Banks," Journal of Risk and Financial Management, 2020. Available: mdpi.com

. H. Hoque and H. Liu, "Capital Structure of Islamic Banks: How Different are They from Conventional Banks?," Global Finance Journal, 2022. Available: researchgate.net

. S. E. Hidayat, M. R. Sakti, and R. A. Al-Balushi, "Risk, Efficiency and Financial Performance in the GCC Banking Industry: Islamic versus Conventional Banks," Journal of Islamic Accounting and Business Research, vol. 12, no. 4, pp. 564-592, Jul. 2021. Available: [HTML]

. G. Nhamo, K. Dube, and D. Chikodzi, Sustainable Development Goals: Concept and Challenges of Global Development Goal Setting. Handbook of Global Health, 2020. Available: academia.edu

. G. Halkos and E. C. Gkampoura, "Where Do We Stand on the 17 Sustainable Development Goals? An Overview on Progress," Economic Analysis and Policy, 2021. Available: [HTML]

. S. Razavi, "The Sustainable Development Goals," The Routledge Handbook of Feminist Economics, 2021. Available: [HTML]

. Kushnir and A. Nunes, "Education and the UN Development Goals Projects (MDGs and SDGs): Definitions, Links, Operationalisations," Journal of Research in International Education, vol. 21, no. 1, pp. 3-21, Apr. 2022. Available: sagepub.com

. R. Gottschalk and D. Poon, "Scaling Up Finance for the Sustainable Development Goals," Southern-Led Development Finance: Solutions from the Global South, Sep. 2020. Available: [HTML]

. N. Kavadis and S. Thomsen, "Sustainable Corporate Governance: A Review of Research on Long‐Term Corporate Ownership and Sustainability," Corporate Governance: An International Review, vol. 31, no. 1, pp. 198-226, Jan. 2023. Available: [HTML]

. Z. Zahoor, I. Khan, and F. Hou, "Clean Energy Investment and Financial Development as Determinants of Environment and Sustainable Economic Growth: Evidence from China," Environmental Science and Pollution Research, 2022. Available: researchgate.net

. G. M. Qamri, B. Sheng, R. M. Adeel-Farooq, and G. M. Alam, "The Criticality of FDI in Environmental Degradation through Financial Development and Economic Growth: Implications for Promoting the Green Sector," Resources Policy, 2022. Available: [HTML]

. M. Ziolo, I. Bak, and K. Cheba, "The Role of Sustainable Finance in Achieving Sustainable Development Goals: Does it Work?," Technological and Economic Development of Economy, vol. 27, no. 1, pp. 45-70, Jan. 2021. Available: vgtu.lt

. J. Wang, S. Zhang, and Q. Zhang, "The Relationship of Renewable Energy Consumption to Financial Development and Economic Growth in China," Renewable Energy, 2021. Available: [HTML]

. N. A. Abasimel, "Islamic Banking and Economics: Concepts and Instruments, Features, Advantages, Differences from Conventional Banks, and Contributions to Economic Growth," Journal of the Knowledge Economy, 2023. Available: [HTML]

. T. Akbar and A. K. Siti-Nabiha, "Objectives and Measures of Performance of Islamic Microfinance Banks in Indonesia: The Stakeholders' Perspectives," ISRA International Journal of Islamic Finance, vol. 14, no. 2, pp. 124-140, Sep. 2022. Available: emerald.com

. T. Julia and S. Kassim, "Exploring Green Banking Performance of Islamic Banks vs Conventional Banks in Bangladesh Based on Maqasid Shariah Framework," Journal of Islamic Marketing, 2020. Available: researchgate.net

. A. Jan, F. W. Lai, and M. Tahir, "Developing an Islamic Corporate Governance Framework to Examine Sustainability Performance in Islamic Banks and Financial Institutions," Journal of Cleaner Production, 2021. Available: [HTML]

. K. Zaman, "The Future of Financial Support for Developing Countries: Regional and Islamic Monetary Funds," 2023. Available: uni-muenchen.de

. M. R. Aderemi and M. S. I. Ishak, "Qard Hasan as a Feasible Islamic Financial Instrument for Crowdfunding: Its Potential and Possible Application for Financing Micro-Enterprises in Malaysia," Qualitative Research in Financial Markets, 2023. Available: [HTML]

. M. N. I. Sarker, M. N. Khatun, and G. M. M. Alam, "Islamic Banking and Finance: Potential Approach for Economic Sustainability in China," Journal of Islamic Marketing, 2020. Available: [HTML]

. M. R. Rabbani, A. Bashar, N. Nawaz, S. Karim, M. A. Ali, H. U. Rahiman, and M. S. Alam, "Exploring the Role of Islamic Fintech in Combating the Aftershocks of COVID-19: The Open Social Innovation of the Islamic Financial System," Journal of Open Innovation: Technology, Market, and Complexity, vol. 7, no. 2, p. 136, Jun. 2021. Available: sciencedirect.com

. M. R. Rabbani, M. A. Ali, H. U. Rahiman, M. Atif, Z. Zulfikar, and Y. Naseem, "The Response of Islamic Financial Service to the COVID-19 Pandemic: The Open Social Innovation of the Financial System," Journal of Open Innovation: Technology, Market, and Complexity, vol. 7, no. 1, p. 85, Mar. 2021. Available: sciencedirect.com

. M. Nouman, M. F. Siddiqi, K. Ullah, and S. Jan, "Nexus between Higher Ethical Objectives (Maqasid Al Shari’ah) and Participatory Finance," Qualitative Research in Financial Markets, vol. 13, no. 2, pp. 226-251, Jun. 2021. Available: [HTML]

. F. Relano, "Ethical and Islamic Banking Compared from a Time-Based Perspective," Journal of Business Ethics, 2023. Available: [HTML]

. Tuqan, I. Abdeljawad, and I. Saleem, "Islamic Financial Ethics and Customer Loyalty in the Islamic Finance Industry: A Review of Literature and Future Directions," Artificial Intelligence and Economic Sustainability in the Era of Industrial Revolution 5.0, pp. 959-973, May 2024. Available: [HTML]

. Mirakhor, Z. Iqbal, and S. K. Sadr, Handbook of Ethics of Islamic Economics and Finance, 2020. Available: [HTML]

. W. Arain, A. H. Madni, and M. A. Aftab, "The Adverse Impact of Ribā on Society," International Research Journal of Management and Social Sciences, vol. 5, no. 1, pp. 355-373, Mar. 2024. Available: irjmss.com

. H. Muhammad, "Islamic Corporate Social Responsibility: An Exploratory Study in Islamic Microfinance Institutions," The Journal of Asian Finance, Economics and Business, vol. 7, no. 12, pp. 773-782, 2020. Available: koreascience.kr

. M. Indriastuti and N. Najihah, "Improving Financial Performance Through Islamic Corporate Social Responsibility and Islamic Corporate Governance," Jurnal Riset Akuntansi dan Bisnis Airlangga, vol. 5, no. 1, pp. 8-18, 2020. Available: academia.edu

. Gunardi, A. Herwany, E. Febrian, and M. Anwar, "Research on Islamic Corporate Social Responsibility and Islamic Bank Disclosures," Journal of Sustainable Finance & Investment, vol. 12, no. 4, pp. 1308-1329, Oct. 2022. Available: perbanas.id

. M. B. Zafar, A. A. Sulaiman, and M. Nawaz, "Does Corporate Social Responsibility Yield Financial Returns in Islamic Banking?," Social Responsibility Journal, 2022. Available: [HTML]

. E. Ermawati, S. Musyahidah, and N. Nurdin, "Muslim Society Perspective on Islamic Banking Corporate Social Responsibility in Indonesia (Based on Qur’an and Hadits Economic Themes)," International Journal of Business and Management Review, vol. 9, no. 3, pp. 29-40, Aug. 2021. Available: iainpalu.ac.id

. E. Hysa, A. Kruja, N. U. Rehman, and R. Laurenti, "Circular Economy Innovation and Environmental Sustainability Impact on Economic Growth: An Integrated Model for Sustainable Development," Sustainability, 2020. Available: mdpi.com

. X. Yang and I. Khan, "Dynamics Among Economic Growth, Urbanization, and Environmental Sustainability in IEA Countries: The Role of Industry Value-Added," Environmental Science and Pollution Research, 2022. Available: researchgate.net

. M. Murshed, M. A. Rahman, M. S. Alam, P. Ahmad, and V. Dagar, "The Nexus Between Environmental Regulations, Economic Growth, and Environmental Sustainability: Linking Environmental Patents to Ecological Footprint Reduction in South Asia," Environmental Science and Pollution Research, vol. 28, no. 36, pp. 49967-49988, Sep. 2021. Available: [HTML]

. Y. Kharazishvili, A. Kwilinski, O. Grishnova, and H. Dzwigol, "Social Safety of Society for Developing Countries to Meet Sustainable Development Standards: Indicators, Level, Strategic Benchmarks," Sustainability, 2020. Available: mdpi.com

. J. D. Moyer and S. Hedden, "Are We on the Right Path to Achieve the Sustainable Development Goals?," World Development, 2020. Available: sciencedirect.com

. M. Sadiq, S. Nonthapot, S. Mohamad, O. C. Keong, S. Ehsanullah, and N. Iqbal, "Does Green Finance Matter for Sustainable Entrepreneurship and Environmental Corporate Social Responsibility During COVID-19?," China Finance Review International, vol. 12, no. 2, pp. 317-333, Apr. 2022. Available: sjtu.edu.cn

. H. Liang and L. Renneboog, "Corporate Social Responsibility and Sustainable Finance: A Review of the Literature," European Corporate Governance Institute–Finance Working Paper, vol. 24, no. 701, Sep. 2020. Available: smu.edu.sg

. Q. J. Wang, H. J. Wang, and C. P. Chang, "Environmental Performance, Green Finance and Green Innovation: What's the Long-Run Relationships Among Variables?," Energy Economics, 2022. Available: [HTML]

. F. A. Cunha, E. Meira, and R. J. Orsato, "Sustainable Finance and Investment: Review and Research Agenda," Business Strategy and the Environment, vol. 30, no. 8, pp. 3821-3838, Dec. 2021. Available: [HTML]

. J. W. Lee, "Green Finance and Sustainable Development Goals: The Case of China," Journal of Asian Finance, Economics and Business, vol. 7, no. 7, pp. 577-586, Jul. 2020. Available: researchgate.net

. K. H. Wang, Y. X. Zhao, C. F. Jiang, and Z. Z. Li, "Does Green Finance Inspire Sustainable Development? Evidence from a Global Perspective," Economic Analysis and Policy, 2022. Available: [HTML]

. M. Contrafatto, J. Ferguson, D. Power, L. Stevenson, and D. Collison, "Understanding Power-Related Strategies and Initiatives: The Case of the European Commission Green Paper on CSR," Accounting, Auditing & Accountability Journal, vol. 33, no. 3, pp. 559-587, Apr. 2020. Available: st-andrews.ac.uk

. J. Lu, M. Liang, C. Zhang, D. Rong, H. Guan, K. Mazeikaite, and J. Streimikis, "Assessment of Corporate Social Responsibility by Addressing Sustainable Development Goals," Corporate Social Responsibility and Environmental Management, vol. 28, no. 2, pp. 686-703, Mar. 2021. Available: [HTML]

. L. Mishra, "Corporate Social Responsibility and Sustainable Development Goals: A Study of Indian Companies," Journal of Public Affairs, 2021. Available: [HTML]

. R. Hasan, M. K. Hassan, and S. Aliyu, "Fintech and Islamic Finance: Literature Review and Research Agenda," International Journal of Islamic Economics and Finance (IJIEF), vol. 3, no. 1, pp. 75-94, Jan. 2020. Available: umy.ac.id

. Alam and P. Seifzadeh, "Marketing Islamic Financial Services: A Review, Critique, and Agenda for Future Research," Journal of Risk and Financial Management, 2020. Available: mdpi.com

. M. Arifin, "The Influence of Islamic Law and Economic Principles on the Banking Industry in Indonesia," Journal of Legal, Ethical & Regulatory Issues, vol. 2, 2021. Available: [HTML]

. E. Ozigbu, "Beyond Vaccination Coverage: A Critical Look at Zero-Dose Children in Sub-Saharan Africa," 2023. Available: [HTML]

. M. K. Hassan, A. Khan, and A. Paltrinieri, "Islamic Finance: A Literature Review," Islamic Finance and Sustainable Development: A Sustainable Economic Framework for Muslim and Non-Muslim Countries, pp. 77-106, 2021. Available: [HTML]

. M. K. Hassan, S. Aliyu, and M. Hussain, "A Contemporary Review of Islamic Finance and Accounting Literature," The Singapore Economic Review, 2022. Available: [HTML]

. Marsham, "The Caliphate," in The Oxford World History of Empire: Volume Two: The History of Empires, Dec. 2020, p. 355. Available: [HTML]

. N. K. Longworth, Islamic Bureaucrats in Late Antiquity: Administration and Elites During the Umayyad Caliphate (ca. 661-750 CE), 2022. Available: uchicago.edu

. Mirakhor, Z. Iqbal, and S. K. Sadr, Handbook of Ethics of Islamic Economics and Finance, 2020. Available: [HTML]

. R. Calder, "Sharīʿah-Compliant or Sharīʿah-Based? The Changing Ethical Discourse of Islamic Finance," Arab Law Quarterly, 2020. Available: researchgate.net

. Kooli, M. Shanikat, and R. Kanakriyah, "Towards a New Model of Productive Islamic Financial Mechanisms," International Journal of Business Performance Management, vol. 23, no. 1-2, pp. 17-33, 2022. Available: researchgate.net

. M. Kamdzhalov, "Islamic Finance and the New Technology Challenges," European Journal of Islamic Finance, 2020. Available: unito.it

. M. Dayyan and R. D. Chalil, "The Attitude of Merchants Towards Fatwa on Riba and Conventional Banks in Langsa," Share: Jurnal Ekonomi dan Keuangan Islam, vol. 9, no. 1, pp. 48-71, Jun. 2020. Available: ar-raniry.ac.id

. M. T. Islam and M. Shafiuddin, "An Analytical Study to Determine Whether All of the Services of Conventional Banking are Permissible or Forbidden in Islam," International Journal of Finance and Banking Research, vol. 6, no. 4, p. 83, 2020. Available: semanticscholar.org

. L. Hamidi and A. C. Worthington, "How Social is Islamic Banking?," Society and Business Review, 2021. Available: [HTML]

. H. Banna and M. R. Alam, "Islamic Banking Efficiency and Inclusive Sustainable Growth: The Role of Financial Inclusion," Journal of Islamic Monetary Economics and Finance, 2020. Available: jimf-bi.org

. S. Belasri, M. Gomes, and G. Pijourlet, "Corporate Social Responsibility and Bank Efficiency," Journal of Multinational Financial Management, vol. 54, p. 100612, Mar. 2020. Available: hal.science

. S. Belkhaoui, N. Alsagr, and S. F. van Hemmen, "Financing Modes, Risk, Efficiency and Profitability in Islamic Banks: Modeling for the GCC Countries," Cogent Economics & Finance, vol. 8, no. 1, p. 1750258, Jan. 2020. Available: tandfonline.com

. M. Gani and Z. Bahari, "Islamic Banking's Contribution to the Malaysian Real Economy," ISRA International Journal of Islamic Finance, 2021. Available: emerald.com

. N. Hoque, "Promoting Business Zakah as a Product of Islamic Finance to Fund Social Causes for Well-being of the Underprivileged: Evidence from Bangladesh," Journal of Islamic Marketing, 2023. Available: researchgate.net

. N. Oktaviani, S. Alaidrus, and S. Siswanto, "The Influence of Qard and Zakat on Profitability of Islamic Banks in Indonesia," Indonesian Interdisciplinary Journal of Sharia Economics (IIJSE), vol. 5, no. 1, pp. 63-73, Jan. 2022. Available: uac.ac.id

. W. A. Mahyudin and R. Rosman, "Value-Based Intermediation and Realisation of Maqasid Al-Shariah: Issues and Challenges for Islamic Banks in Malaysia," Advanced International Journal of Banking, Accounting and Finance, vol. 5, no. 2, pp. 34-44, 2020. Available: archive.org

. M. A. Chowdhury, M. A. Al Masud, M. Atiullah, and J. I. Tanvir, "Contemporary Responses to the Criticism of Islamic Banks in Malaysia," European Journal of Islamic Finance, no. 15, Aug. 2020. Available: unito.it

. B. Setyowati, "Governing Sustainable Finance: Insights from Indonesia," Climate Policy, 2023. Available: researchgate.net

• View Article

This work is licensed under a Creative Commons Attribution 4.0 International License.