Exploring Islamic finance
In the wake of the recent financial crisis of 2008, the western world became aware of an alternative financial system in the form of Islamic finance that seemed to have survived the crises much more smoothly than conventional finance. Islamic finance does not allow interest-based transactions and investment into derivatives or any speculative instruments. All the transactions have to asset-based and this not only minimises the risk but also prevents financial speculation which leads to a bubble ready to be burst. As this documentary explores, this is exactly what happened when derivative instruments became worth more than the GDP of the entire world simply because they were not backed by an assets and were based on pure speculation. And this is what Islamic finance seeks to protect the economy from.
‘From Bazaar to Wall Street’ explores the rise of Anatolian entrepreneurs who with their frugal means of consumption and spending set forth a new wave of Islamic finance in eastern Turkey
‘From the Bazaar to Wall Street’ explores the rise of Anatolian entrepreneurs who with their frugal means of consumption and spending set forth a new wave of Islamic finance in eastern Turkey. They invested their money heavily in the economy which is one of the reasons why Turkey is enjoying an economic boom these days. But the documentary argues that Islamic economics does not offer a new financial system but the same capitalist system that came to be known as the ‘Protestant Ethic’ by Max Weber. Professor Volker Nienhaus, a Turkish economist, argues that Islamic finance does not offer an economic difference in its transactions; the difference is only legal. The documentary also argues that because most of the Islamic financial products have to be traded on Wall Street, Islamic finance cannot thus truly flourish.
But by using only three to four sources as the main opinion-givers of the narrative and by referring to ‘Islamic finance’ as a ‘centuries-old economic system’ over and over again, the bias in the documentary became apparent after the first 30 minutes. The documentary also did not cover the Islamic financial market in South East Asia, especially Malaysia and Indonesia. While Turkey and the Gulf may be the two golden eggs for Islamic finance, they are not the only two. Also, it kept on referring to ‘Islamic finance’ as a healthy alternative for Muslim countries but did not even consider the fact that Islamic finance can be as beneficial for non-Muslim countries too.
The documentary also argues that because most of the Islamic financial products have to be traded on Wall Street, Islamic finance cannot thus truly flourish
‘From the Bazaar to Wall Street’ must be credited with one very legit point though; many of the Muslim entrepreneurs first start their business by taking a loan from a conventional bank because the fees of Islamic banks are simply too high. Once they have paid back the principal along with the interest payments, they switch to interest-free financing from Islamic banks. Perhaps this is one area the Islamic banks need to look into. Overall, this documentary is a very frustrating watch if you are a critic, but nevertheless raises some very important issues of whether and why there is a difference between the theory and application of Islamic economics today.