Systems’ Convergence: Boon or Bane?

This chapter examines if the convergence of the Islamic and conventional financial systems has been beneficial or cumbersome for faith-based economics. It finds that convergence has led to an initial structure-objective mismatch in the launching of Islamic finance. The abolition of interest and promotion of growth with equity were goals of the conceived system. These goals expressed a long-run vision to improve the condition of Muslim communities across the world. However, the organizational form adopted for Islamic finance, especially banking, was of the existing commercial institutions that provided essentially short-term loans on interest to trade, industry, and commerce.