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Blockchain Technology - Arsenal for a Shariah-Compliant Financial Ecosystem
Lacasse, Richard-Marc; Lambert, Berthe; Khan, Nida
2017In Journal of Business and Economics
Peer reviewed
 

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Keywords :
Islamic Finance; Blockchain Technology; Transparency; Agency Theory
Abstract :
[en] The authors’ first challenge is to decipher the complexity of Islamic Finance despite the opacity of the sector. A second focal point is the agent’s agenda; in the Islamic Finance industry, contributors mandate intermediaries (agents) to transfer their contributions to social causes according to the Shariah; in principle, Islamic financial institutions must create value for their stakeholders by offering Shariah-compliant products and services. An underlying assumption of agency theory is that agents attempt to maximize their personal welfare and compensation, but such behaviour may not always be in the best interests of other stakeholders, and an analysis of the agent’s agenda can help explain how agents can fall off the pedestal of altruism. Relationships between Islamic banks and three key stakeholders (contributors, beneficiaries and regulators) are also explored via a complexity-aware monitoring process. Contributors provide funds to an Islamic bank (agent), and in return, the agent should be accountable to the contributors, but the form and degree of accountability can vary depending on the organization’s mission. There are many unanswered questions regarding the monitoring process. One objective of the article is to consider whether agents act in the best interests of the stakeholders. Finally, the authors explore the following question: Can blockchain technology and smart contracts support and enhance the transparency feature, which is the core underlying principle of all transactions in the Islamic Finance industry? A qualitative research framework was adopted because of the constraints of the enigmatic, secretive Islamic Finance culture.
Disciplines :
Finance
Author, co-author :
Lacasse, Richard-Marc
Lambert, Berthe
Khan, Nida ;  University of Luxembourg > Interdisciplinary Centre for Security, Reliability and Trust (SNT)
External co-authors :
yes
Language :
English
Title :
Blockchain Technology - Arsenal for a Shariah-Compliant Financial Ecosystem
Publication date :
05 December 2017
Event name :
5th International Conference of Entrepreneurial Finance, CIFEMA 2017
Event organizer :
Ibn Zohr University
Event place :
Agadir, Morocco
Event date :
4-12-2017 to 5-12-2017
Audience :
International
Journal title :
Journal of Business and Economics
ISSN :
2351-8111
Publisher :
CNRST-IMIST, Rabat, Morocco
Peer reviewed :
Peer reviewed
Focus Area :
Entrepreneurship and Innovation / Audit
FnR Project :
FNR11617092 - Data Analytics And Smart Contracts For Traceability In Finance, 2017 (01/03/2017-31/01/2021) - Nida Khan
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