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Philanthropy, markets, and Islamic financial institutions: a new paradigm

Osamah Hussian Rawashdeh (College of Economics and Finance, Qassim University, Buraidah, Saudi Arabia)
Toseef Azid (College of Economics and Finance, Qassim University, Buraidah, Saudi Arabia)
Muhammad Azeem Qureshi (Oslo and Akershus University College of Applied Sciences, Oslo Business School, Oslo, Norway)

Humanomics

ISSN: 0828-8666

Article publication date: 13 November 2017

637

Abstract

Purpose

There is no consensus among the experts that welfare can be increased through philanthropy or market is sufficient for the achievement of targeted level of welfare. It is still a main quest that giving visible good to one known fellow is better or market ethos have more positive impact on the society where we have needs of thousands of unknown. Markets, in Hayek’s view, are superior to philanthropy – economically, ethically and epistemologically – because they “confer benefits beyond the range of our concrete knowledge” (Hayek 1988, p. 81) and thus provide “a greater benefit to the community than most direct ‘altruistic’ action”. The same can be expected from the ethical and moral financial institutions having the objective not to only increase their profit but also equally trying to serve the community and society. This paper aims to propose a constructive model in which markets, philanthropy and financial institutions work together to enhance welfare, human freedom, flourishing and voluntary social cooperation.

Design/methodology/approach

This paper examines the conceptual dualisms through which commerce – philanthropy relationship (e.g. modern versus Islamic socialism) and the historical–philosophical context in which they were formulated. This helps integrate philanthropy into Hayek’s theory of economic and social order through financial institutions.

Findings

This paper explores the foundations of an Islamic view of philanthropic action. This discussion is inspired by the emerging literature of positive psychology and double movement of Polanyi (2001).

Research limitations/implications

Proper data are not available for the Islamic countries.

Practical implications

Without abandoning Hayek’s theory of markets, this study sketches a view of commercial society in which markets and philanthropy (“voluntary giving and association that serves to promote human flourishing”) work together to enhance welfare human freedom, flourishing and voluntary social cooperation under the umbrella of Islam and also explores the different dimensions that how Islamic financial intuitions are becoming the instrument for the incremental change of this integration.

Social implications

This study guides the policy makers that how social and economic welfare can be increased through the interaction of Islamic financial institutions and philanthropy.

Originality/value

This is an original attempt.

Keywords

Acknowledgements

This paper is the revised version and updated of that paper which was presented in the 4th International Conference on Inclusive Islamic Financial Sector (15th-16th October 2015) organized by Islamic Development Bank and International Islamic University, Islamabad, Pakistan.

Citation

Rawashdeh, O.H., Azid, T. and Qureshi, M.A. (2017), "Philanthropy, markets, and Islamic financial institutions: a new paradigm", Humanomics, Vol. 33 No. 4, pp. 563-578. https://doi.org/10.1108/H-08-2016-0063

Publisher

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Emerald Publishing Limited

Copyright © 2017, Emerald Publishing Limited

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