Islamic finance in global markets: Materialism, ideas and the construction of financial knowledge

ABSTRACT: In light of the dramatic expansion Islamic finance (IF) has experienced over the past few decades, the industry has received increasing attention, not only within Muslim economies, but all around the world, as illustrated by the involvement of numerous non-Muslim public and private institutions. As the Islamic financial movement is increasingly becoming a global phenomenon, this paper critically examines the ‘materialist’-led contributions in the social sciences (especially in economics and finance) on the rise of this alternative set of practices and ideas. In doing so, social constructivism is introduced as a fertile intellectual framework to complement the current debates on this topic. At the end of this paper, three new perspectives on IF are distilled from the latter's encounter with social constructivism. These reside in (1) providing an alternative epistemological position on the encounter between conventional and Islamic financial knowledge; (2) highlighting the presence of structures of authority in the emergence of financial alternatives such as IF; and (3) emphasizing the role of key economic agents/institutions in the global diffusion of Islamic financial ideas.