Recent empirical studies have shown that Islamic finance, despite its widely-advertised growth, has not improved financial inclusion of Muslims, who remain among the most excluded financially. This is not surprising in light of the genesis and modes of operation of this industry. Islamic finance was born in the second half of the twentieth century as a child of nationalist-Islamic identity politics, on the one hand, and petrodollar flows on the other. Its modes of operation during the twentieth century were mainly based on medieval and ancient legal stratagems to circumvent ancient prohibitions, which predate Islam. The second surge of Islamic finance in the twenty-first century was powered by a second wave of petrodollars, together with advances in structured finance — originally developed for tax purposes. This lecture will explain the origins and modes of operation of Islamic finance as a contemporary form of religious-legal arbitrage, which caters to a rather narrow market segment, and, hence, fails to contribute substantially to financial inclusion or development.

Mahmoud Amin El-Gamal is a Professor of Economics and Statistics at Rice University, where he also holds the endowed Chair in Islamic Economics, Finance and Management. During academic year 2014-15, he was on leave from Rice University, and served as Provost at his alma mater, The American University in Cairo. Before joining Rice in 1998, he was an Associate Professor of Economics at the University of Wisconsin–Madison. He has also worked as an Assistant Professor of Economics at the University of Rochester and the California Institute of Technology; as an economist in the Middle East Department of the International Monetary Fund (1995-1996); and as the first Scholar-in-Residence on Islamic finance at the U.S. Department of Treasury (2004). El-Gamal has published on finance, econometrics, decision science, economics of the Middle East, and Islamic transactions law. His recent books include Islamic Finance: Law, Economics and Practice (Cambridge University Press, 2006) and Oil, Dollars, Debt and Crises: The Global Curse of Black Gold with Amy Myers Jaffe (Cambridge University Press, 2010).

This event is a joint project by:

•    The Centre for Arab & Islamic Studies, ANU College of Arts & Social Sciences
•     Research School of Finance, Actuarial Studies & Statistics, ANU College of Business  & Economics
•     Research School of Economics, ANU College of Business & Economics

Register for event here

Contact: cais@anu.edu.au