The extent of the contribution of non-participatory Islamic financing methods In promoting Financial stability

Abstract

This study aims to assess the extent to which non-participatory Islamic financing methods contribute to enhancing financial stability. The study showed that the Islamic financial system has a role in enhancing financial stability in general and facing financial crises in particular through two axes: The first axis; It is preventive by prohibiting the causes of the crises themselves; As for the second axis, it is remedial, by financing economic recession cycles with various Islamic financing methods based on partnerships, and even those based on debts and those based on compassion and solidarity. However, the same study confirmed that the practical reality of the Islamic financial system is through the work of Islamic banks; The tendencies of the latter have proven their application of debt methods at the expense of participatory methods. Dependent on this development finance on the one hand; On the other hand, through zakat funds and institutions of waqf, the weakness of zakat and endowment collection in Arab and Islamic countries has proven ineffective in donative methods in promoting financial stability and facing crises, unlike in Western countries Which benefited from the liquidity of charities in alleviating the severity of the financial crises; Similar to the 2008 global financial crisis.