A Case for an Islamic Social Impact Bond
11 Pages Posted: 14 Dec 2015 Last revised: 12 Jan 2016
Date Written: December 11, 2015
Abstract
While the premise of Islamic finance is often couched in the principle of maqasid al-shariah with claims to social justice and welfare, the impact and contribution to the social sector has been minimal. This paper examines the claim among critics that there is an inherent weakness in the Islamic banking and finance industry in terms of its underdeveloped social sector. We argue that to be true to its spirit, Islamic finance has to have a more inclusive role in the economy by enhancing the proliferation of shariah compliant financial products for solutions in the social sector. The paper also highlights developments of SIB (social impact bond) in the social finance space and draws parallel to similar trends in Islamic finance. The paper provides a case for structuring an Islamic SIB by highlighting the benefits of such structures.
Keywords: social impact bond (SIB), shariah compliant, maqasid al shariah, Islamic finance, social finance
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