Philosophy to be given priority over profitability,

Philosophy and religion have in the past been essential in
advancing morals in business, their commitments might be disregarded in the
present talk and writing on business ethics. Nowadays, business ethics is dealt
with barely as a connected rationality and sociology, despite the fact that, on
a pragmatic level, religious lessons educate and shape the ethical quality of a
significant bit of the business populace. The writing is divided and spread
over an assortment of sources, and does not adequately give a methodical system
of business morals in spite of the presence of numerous rich dialogs about this
idea in Islamic sources. The systematization of Islamic fund went for advancing
certain moral esteems, for example, the denial of unfair works on, empowering
control, adjust and congruity throughout everyday life, and helping the
underprivileged. However, current practices of Islamic financial institutions
have been criticised for failing to promote such values, as they often adopt a
‘form over substance’ approach in Islamising conventional finance.

Bank Negara Malaysia has made it obligatory for Malaysian banks to
be straightforward and uncover apropos data, and that corporate and shariah
administration structures are set up to advance uprightness in satisfying their
obligations. However, in general, the banks depend heavily on sale and lease
based contracts in providing financing. Profit/loss-and-risk-sharing contracts
are almost absent. The banks have additionally yet to effectively present
microfinancing plans, and there is by all accounts a decrease in the level of
financing gave to small and medium enterprise.

Since an inadequate emphasis on ethics is one of the banes of the
conventional system, there is need to guard against all sorts of market
indiscipline on the part of the stakeholders. Policy makers and standard
setting organisations need to exhibit knowledge, integrity and, most
importantly, the fear of Allah. Regulators are to implement regulations to the
best of their ability. To avert a systemic crisis in the industry, or to
prevent Islamic finance from being assimilated to conventional finance, thereby
compromising its identity, issues of ethics need to be adequately addressed.
There is a need for a transition from a shariah compliant to a shariah based
approach. Shariah screening should be both internal and external. While it has
been argued that ethics and profits are valid business objectives,
complementary to each other rather than substitutes, there is no empirical
evidence to demonstrate that a trade-off exists between the two. Lastly,
ethical concerns need to be given priority over profitability, if the long-term
survival of the industry is to be ensured.


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