Journal of Business Ethics

, Volume 123, Issue 3, pp 475–491 | Cite as

Western Financial Agents and Islamic Ethics

  • Eddy S. Fang
  • Renaud FoucartEmail author


This paper investigates Western professional bankers’ perceptions of Islamic finance. Exploiting data from an original survey, we carry out a principal component analysis (PCA) to characterize the main dimensions on which financial agents diverge. The PCA extracts five dimensions—accounting for 61 % of the variance in the agents’ answers—that we interpret with the help of a pilot field survey. In addition to confirm the increased association of Islamic financial values with ethical practices in the West, our results allow us to understand how the observed growth of the industry has been conceptualized by conventional agents. The five dimensions identified shed light on the multitude of constructs that have informed the diffusion of Islamic financial ideas to international markets. This supports the fact that Islamic finance cannot be seen as a single movement but is characterized by opposing and concurrent logics in global markets.


Islamic finance Business ethics Global finance Social psychology Principal component analysis 


  1. Abdullah, D., & Chee, K. (2010). Islamic finance. Why it makes sense. Singapore: Marhsall Cavendish International.Google Scholar
  2. Ahmad, M. (2008). Sub-prime crisis from Islamic commercial law perspective. Kuala Lumpur: Social Science Research Network.Google Scholar
  3. Akerlof, G., & Dickens, W. (1982). The economic consequences of cognitive dissonance. American Economic Review, 72(3), 307–319.Google Scholar
  4. Alreck, P., & Settle, R. (2004). Survey research handbook. New York: McGraw-Hill.Google Scholar
  5. Askari, H., Iqbal, Z., et al. (2010). Globalization and Islamic finance. Chichester: Wiley.Google Scholar
  6. Aydin, N. (2009). The 2008 financial crisis: A moral crisis of capitalism. Harvard University: 9th Harvard University Forum on Islamic Finance.Google Scholar
  7. Ayub, M. (2007). Understanding Islamic finance. Chichester: Wiley Finance.Google Scholar
  8. Azarian, R. (2011). Outline of an economic sociology of Islamic banking. International Journal of Business and Social Science, 2(17), 258–268.Google Scholar
  9. Aziz, Z. (2010). The Global Islamic Financial market today—Challenges and way forward. The Asset Triple A Awards for Islamic Finance, 6th July. Kuala Lumpur.Google Scholar
  10. Beck, T., Demirguc-Kunt, A., et al. (2010). Islamic vs. conventional banking. The World Bank Policy Research Working Paper 5446.Google Scholar
  11. Berry, D. (2004). Internet research: Privacy, ethics and alienation: An open source approach. Internet Research, 14(4), 323–332.CrossRefGoogle Scholar
  12. Boatright, J. (2010). Finance ethics. Critical issues in theory and practice. Hoboken, NJ: Wiley.CrossRefGoogle Scholar
  13. de Goede, M. (2006). International political economy and poststructural politics. Basingstoke: Palgrave.CrossRefGoogle Scholar
  14. Dillman, D. (2000). Mail and internet surveys (2nd ed.). Hoboken: Wiley.Google Scholar
  15. Dunteman, G. (1989). Principal components analysis. Beverly Hills: Sage.Google Scholar
  16. Elmelki, A., & Ben Arab, M. (2009). Ethical investment and the social responsibilities of the Islamic banks. International Business Research, 2(2), 123–130.Google Scholar
  17. Fabian, A. (1990). Card sharps, dream books & bucket shops. Ithaca: Cornell University Press.Google Scholar
  18. Fang, E. (2013). The diffusion of Shariah-based knowledge in global finance. A cognitive investigation among Western Economic Agents. Unpublished doctoral dissertation, University of Cambridge, Cambridge.Google Scholar
  19. Festinger, L. (1957). A theory of cognitive dissonance. Evanston, IL: Row Peterson and Company.Google Scholar
  20. Goodman, L. A. (1961). Snowball sampling. The Annals of Mathematical Statistics, 32(1), 148–170.Google Scholar
  21. Greenspan, R. (2003). Tracking the experienced users. Accessed 27 Aug 2012.
  22. Hayat, R., & Kraeussl, R. (2011). Risk and return characteristics of Islamic equity funds. Emerging Markets Review, 12(2), 189–203.CrossRefGoogle Scholar
  23. Heckathorn, D. (1997). Respondent-driven sampling: A new approach to the study of hidden populations. Social Problems, 44(2), 174–199.CrossRefGoogle Scholar
  24. Hosseini, H. (1997). Cognitive dissonance as a means of explaining economics of irrationality and uncertainty. Journal of Socio-Economics, 26(2), 181–189.CrossRefGoogle Scholar
  25. Hurwicz, L. (1972). On informationally decentralized systems. In R. Radner & C. B. McGuire (Eds.), Decision and organization: A volume in honor of Jacob Marschak (pp. 297–336). Amsterdam: North-Holland Pub.Google Scholar
  26. Ilieva, J., Baron, S., et al. (2002). Online surveys in marketing research: Pros and cons. International Journal of Marketing Research, 44(3), 361–376.Google Scholar
  27. Jensen, N. (2008). Avoiding another subprime mortgage bust through greater risk and profit sharing and social equity in home financing: An analysis of Islamic finance and its potential as a successful alternative to traditional mortgages in the United States. Arizona Journal of International and Comparative Law, 25(3), 825–855.Google Scholar
  28. Joliffe, I. (2002). Principal component analysis. New York: Springer.Google Scholar
  29. Kolb, R. (2010). Ethical implications of finance. Finance ethics. Critical issues in theory and practice. Hoboken, NJ: Wiley.Google Scholar
  30. Koyama, M. (2009). Evading the ‘taint of usury’: The usury prohibition as a barrier to entry. Explorations in Economic History, 47(4), 420–442.CrossRefGoogle Scholar
  31. Kuran, T. (2004). Islam and Mammon: The economic predicaments of Islamism. Princeton, NJ: Princeton University Press.Google Scholar
  32. Lewis, M., & Algaoud, L. (2001). Islamic banking. Cheltenham: Edward Elgar.Google Scholar
  33. Likert, R. (1932). A technique for the measurement of attitudes. Archives of Psychology, 140, 1–55.Google Scholar
  34. Malhotra, N. (2004). Marketing research: An applied orientation (4th ed.). Englewood Cliffs, NJ: Prentice Hall.Google Scholar
  35. Malhotra, N., & Peterson, M. (2001). Marketing research in the new millennium: Emerging issues and trends. Marketing Intelligence & Planning, 19(4), 216–235.CrossRefGoogle Scholar
  36. Maniam, B., Bexley, J., et al. (2000). Perception of Islamic financial system: Its obstacles in application and its market. Academy of Accounting and Financial Studies Journal, 4(2), 22–36.Google Scholar
  37. Maurer, B. (2005). Mutual life, limited: Islamic banking, alternative currencies, lateral reason. Princeton, NJ: Princeton University Press.Google Scholar
  38. McDaniel, C., & Gates, R. (2005). Marketing research (6th ed.). New York, NY: Wiley.Google Scholar
  39. Metwally, M. (1997). Economic consequences of applying Islamic principles in Muslim societies. International Journal of Social Economics, 24(7/8/9), 941–957.CrossRefGoogle Scholar
  40. Naughton, S., & Naughton, T. (2000). Religion, ethics and stock trading: The case of an Islamic equities market. Journal of Business Ethics, 23(14), 145–159.CrossRefGoogle Scholar
  41. Nazim, A. M., & Ibrahim, I. (2012). The world Islamic banking competitiveness report 2011–2012, Ernst & Young, 18th Annual world Islamic banking conference, Dubai.Google Scholar
  42. Neil, J. T. (2012). Exploratory factor analysis. Survey research & design in psychology. Unpublished report, University of Canberra, Canberra.Google Scholar
  43. Nienhaus, V. (2011). Islamic finance ethics and Shari’ah law in the aftermath of the crisis: Concept and practice of Shari’ah compliant finance. Ethical Perspectives, 18(4), 591–623.Google Scholar
  44. Perry, F., & Rehman, S. (2011). Globalization of Islamic finance: Myth or reality? International Journal of Humanities and Social Science, 1(19), 107–119.Google Scholar
  45. Pollard, J. S., & Samers, M. (2007). Islamic banking and finance: Postcolonial political economy and the decentring of economic geographies. Transactions of the Institute of British Geographers, 32(3), 313–330.CrossRefGoogle Scholar
  46. Rethel, L. (2011). Whose legitimacy? Islamic finance and the global financial order. Review of International Political Economy, 18(1), 75–98.CrossRefGoogle Scholar
  47. Rice, G. (1999). Islamic ethics and the implications for business. Journal of Business Ethics, 18(4), 345–358.CrossRefGoogle Scholar
  48. SAS. (1998). Principal component analysis. Accessed 15 Oct 2010.
  49. Schonlau, M., Fricker, R., et al. (2001). Conducting research surveys via e-mail and the Web. Santa Monica, CA: Rand Corporation.Google Scholar
  50. Segrado, C. (2005). Islamic microfinance and socially responsible investments. Microfinance Project at the University of Torino, Torino.Google Scholar
  51. Shlens, J. (2009). A tutorial on principal component analysis. San Diego, CA: Systems Neurobiology Laboratory, Salk Institute for Biological Studies.Google Scholar
  52. Spaeth, M. (1977). Recent publications on survey research techniques. Journal of Marketing Research, 14(3), 403–409.CrossRefGoogle Scholar
  53. UKIFS. (2012). Islamic finance. Financial markets series. London: U. I. F. Secretariat.Google Scholar
  54. Warde, I. (1997). Perceptions of Islamic banks among European and American bankers. IBPC Working Paper. San Francisco: IBPC.Google Scholar
  55. Warde, I. (2000). Islamic finance in the global economy. Edinburgh: Edinburgh University Press.CrossRefGoogle Scholar
  56. Warde, I. (2010). Islamic finance in the global economy. Edinburgh: Edinburgh University Press.Google Scholar

Copyright information

© Springer Science+Business Media Dordrecht 2013

Authors and Affiliations

  1. 1.International Business School SuzhouXi’an Jiaotong Liverpool UniversitySuzhouChina
  2. 2.Department of Economics, Nuffield CollegeUniversity of OxfordOxfordUK

Personalised recommendations