nep-isf New Economics Papers
on Islamic Finance
Issue of 2024‒01‒29
two papers chosen by
Ali Polat, Ankara Yıldırım Beyazıt Üniversitesi

  1. Harmony and Divergence between Behavioral Finance and Islamic Finance By Noureddine Abdelbaki; Rajae Sabhi; Abderrahim Oiskhine; Soumaya Outellou
  2. Islamic Republic of Mauritania: Technical Assistance Report-Governance Diagnostic Report By International Monetary Fund

  1. By: Noureddine Abdelbaki (ENCGK - ENCG University Ibn Tofail of Kenitra, Morocco); Rajae Sabhi (ENCGK - ENCG University Ibn Tofail of Kenitra, Morocco); Abderrahim Oiskhine; Soumaya Outellou
    Abstract: This comparative study explores behavioral finance and Islamic finance in depth, highlighting their fundamental differences and points of convergence. On the one hand, behavioral finance delves into the study of cognitive biases and irrational behaviors that influence financial decisions, offering an essential psychological perspective on markets. Islamic finance, on the other hand, is founded on ethical principles in line with "Sharia" law, aiming to create a financial system based on justice and equity. Prominent figures, including Kahneman &Tversky (1979), Thaler (2015) and Usmani (2002), have played a major role in the development of these fields. This analysis also examines the implications of these two approaches for financial decision-making, financial products, ethics and social responsibility. It emphasized the importance of understanding the behavioral mechanisms behind investment choices, and of designing financial products in line with ethical principles. In addition, it suggests avenues for future research, including exploring the potential integration of behavioral finance principles into Islamic finance. Methodologically, this study is based on an analysis of academic literature and specialized sources in both fields, providing essential information on their origins, objectives, financial instruments and mechanisms. It then adopts a rigorous comparative approach to identify the crucial convergences and divergences between behavioral finance and Islamic finance. Through the synthesis of this data, this study aspires to offer an in-depth understanding of the possible synergies between these two approaches and their potential contribution to more responsible financial markets. Ultimately, this research aims to shed light on the complex relationship between behavioral and Islamic finance, while providing practical recommendations for policymakers, investors and financial market players seeking to leverage these fields to shape a more ethical, equitable and sustainable financial future
    Abstract: Cette étude comparative explore en profondeur la finance comportementale et la finance islamique, mettant en lumière leurs différences fondamentales et leurs points de convergence. En effet, la finance comportementale plonge dans l'étude des biais cognitifs et des comportements irrationnels qui influencent les décisions financières, offrant une perspective psychologique essentielle sur les marchés. En revanche, la finance islamique se fonde sur des principes éthiques en accord avec la "Charia", visant à créer un système financier basé sur la justice et l'équité. Des figures éminentes, dont Kahneman & Tversky (1979), Thaler (2015) & Usmani (2002) ont joué un rôle majeur dans le développement de ces domaines. Cette analyse examine également les implications de ces deux approches pour la prise de décision financière, les produits financiers, l'éthique et la responsabilité sociale. Elle souligne l'importance de comprendre les mécanismes comportementaux derrière les choix d'investissement et de concevoir des produits financiers conformes à des principes éthiques. De plus, elle propose des pistes de recherche futures, notamment l'exploration de l'intégration potentielle des principes de la finance comportementale dans la finance islamique. Sur le plan méthodologique, cette étude repose sur une analyse de la littérature académique et des sources spécialisées dans les deux domaines, permettant de recueillir des informations essentielles sur leurs origines, leurs objectifs, leurs instruments financiers et leurs mécanismes. Elle adopte ensuite une approche comparative rigoureuse pour identifier les convergences et les divergences cruciales entre la finance comportementale et la finance islamique. En consolidant ces données, cet article aspire à offrir une compréhension approfondie des synergies possibles entre ces deux approches et de leur contribution potentielle à des marchés financiers plus responsables. En définitive, l'objectif de cette étude est de mettre la lumière sur la relation complexe entre la finance comportementale et la finance islamique, tout en proposant des recommandations concrètes aux décideurs, aux investisseurs et aux acteurs du marché financier cherchant à tirer parti de ces domaines pour façonner un avenir financier plus éthique, équitable et durable.
    Keywords: Behavioral finance, Islamic finance, Cognitive bias, Sharia law, Financial decision-making.
    Date: 2023–10–26
  2. By: International Monetary Fund
    Abstract: [This report is only available in French] At the request of the authorities of the Islamic Republic of Mauritania, on, an interdepartmental (LEG/FAD/MCM, FIN) Governance Diagnostic Assessment was conducted in June 2022. In line with the IMF’s 2018 Framework on Enhanced Fund Engagement on Governance, the diagnostic assessment focused on corruption vulnerabilities and governance weaknesses linked to corruption in macroeconomically critical priority areas of: (i) the anti-corruption, anti-money laundering and combating the financing of terrorism; (ii) fiscal governance (e.g., public financial management, tax policy and revenue administration, state enterprise management, and public procurement); (iii) central bank governance; (iv) financial sector oversight; and (v) enforcement of contract and protection of property rights. The report contains recommendations for improving governance, integrity, and economic outcomes.
    Date: 2023–12–18

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