Principles of Islamic Finance and Principles of Corporate Social Responsibility: What Convergence?

Abstract

Islamic Finance, among its other features, figures as a financial and economic model based on principles and ethical values in which sustainable development and social responsibility play an essential role. The aim of this study is to illustrate the concept of Corporate Social Responsibility (CSR) with specific reference to Islamic financial institutions, their principles, values and objectives, in order to understand the underpinning dynamics and identify the convergences between the principles underlying conventional CSR and those of Islamic Finance. Specifically, the ultimate purpose of the comparison is to highlight how CSR may constitute a significant factor of convergence between Islamic and conventional finance systems, going beyond the logic of sustainability in short-term marketing policy and implementing medium-and long-term sustainability. This approach aims at increasing the potential for value creation and the pursuit of economic, social and environmental results for all stakeholders. This convergence should, finally, create conditions favourable to the harmonisation of the regulations and directives relative to CSR in the different countries, and therefore a better integration between Islamic finance institutions and conventional ones in the economic contexts.

Sustainability of Leverage Levels in Response to Shocks in Equity Prices: Islamic Finance as a Socially Responsible Investment

“…This is exhibited where firms with excessive leverage and risk-taking behavior are excluded from both screening approaches [33]. Further evidence on the potential convergence between Islamic finance and SRI investments is based on the similar guiding principle of corporate social responsibility which allows harmonization of corporate objectives with the aim of achieving sustainable outcomes for all stakeholders from the social, economic and environmental perspective in the medium and long-term [34].…”

“…The results show that compliant firms tend to hold lower levels of debt relative to their non-compliant counterparts based on both measures. This could be attributed to the limitation placed on borrowing from conventional sources of financing [34].…”

Islamic Financial Literacy Index of Students: Bridging SDGs of Islamic Finance

“…To review Islamic financial literacy, every Muslim is required to understand financial matters; as a result, every Muslim's success can be ensured in accordance with Sharia principles (Albaity & Rahman 2019). The balance between increasing profits and upholding Islamic standards is the foundation for Islamic finance's operational activities, according to the characteristics of Islamic financial principles (Franzoni & Ait Allali 2018). In addition, Zaman et al (2017) have confirmed the importance of Islamic financial literacy, namely as an alternative financial instrument compared to conventional financial instruments.…”

Efficiency of the Public Pensions Funds on the Socially Responsible Equities of Mexico

“…Also, some Hinduist and Buddhist precepts have been considered to decide in which economic activities are more appropriate to invest in. Departing from those moral and religious practices, there are some documented records [7][8][9] that suggest that the Puritans or the Muslim people have a specific screening process to determine what type of activities to invest in or to finance [7,10,11]. In the decade of the 1970's, SRI started in the United States as a form of activist investing in order to make a negative screening process of the stocks of companies involved in weapon production or supplies for the U.S. war in Vietnam [7].…”

“…Also, our position is to contribute to the literature that propose to include an SRI only screening in the optimal portfolio selection process as is the case of [10,[38][39][40] and to the literature that review the investment selection and price formation due to SRI [7][8][9]26,[41][42][43]. Also, we want to extend the previous work of SRI in emerging countries, such as Mexico, by following the review made by Valencia [44].…”