Page 7 - Valentino Cattelan - In the name of God: managing risk in Islamic finance

IANUS n. 26-2022 ISSN 1974-9805

comparative perspective, moving from the Western to the Arab side of the
Mediterranean by looking at the hazard, ﺮﻫﺯ zahr, the ‘dice’ of future chances,
through an inter-cultural approach. In other terms, does a different anthropology
of risk characterize Islam in comparison to the West? Should we tell, in this
regard, a story of risk different from Bernstein’s? And, if this diverse story is still
to be told, how much may it help us to ‘define what it means to be a human being’
in a Muslim context?
Indeed, today the investigation on ριζα/rizq is far from being purely
speculative and confined to comparative linguistics or the domain of intellectual
conjectures. On the contrary, it can be directly related to the development of a
niche of the financial system whose outstanding peculiarity, to Bernstein’s
surprise, is to operate not ‘against’ but ‘in the Name of God’: namely, the market
of Islamic finance.
In this direction, challenging the perils of the Mediterranean in the search for
another root of safety from the unexpected (the ancient Greek ριζα), this article dares
to look at human fortune in the light of the Arabic rizq, and investigating how a
diverse anthropology of risk in Islam may actually result in alternative practices of
risk management, as manifested today by Shari‘ah-compliant financial institutions.
Thus, the Islamic financial market and its peculiar principles (prohibitions of
riba, interest; uncertainty and speculation, gharar; gambling, maysir) will be
depicted within an anthropology of time where not only the future, but also the
present, are a divine (rather than human) creation, and where, accordingly, risk
itself is deeply re-framed both as a concept and as a source of legitimate profit.
Indeed, to the extent to which, as we will see, in a reality created directly by God
the future remains an economic opportunity (Q. II:275: «Allah has permitted
trade»), any legitimate profit follows from man’s responsibility (al-kharaj bi-l-
daman) in performing Shari‘ah by participating in the divine creation of the ‘real’
and as an ‘agent’ of the only ‘Actor’. It is this dual canon of ‘participation’ and
‘agency’ that coherently implies a conceptualization of risk in Islam, which is
focused on the primacy of the real economy; exchange equilibrium (with any
unlawful increase due to riba, gharar or maysir being prohibited); and profit-loss
sharing (section 2 of this article).
As a result, alternative rationales rule risk management in Islamic finance. In fact,
while risk continues to hold an economic value, this value is linked to real assets and
business activities through the assumption of liability (‘profit follows responsibility’,
al- kharaj bi-l-daman), leading to fundamental peculiarities in the practice of Islamic
banking, insurance (takaful) and securities (sukuk) trade that can hardly be compared
to conventional ones, as well as rejecting financial products, such as derivatives that
are deemed lacking in any commercial value since nothing ‘real’ is actually traded
(section 3). To conclude (section 4), the article will remark how this alternative story
of risk would require further consideration in financial theory and regulation, for the
benefit of a level playing field where conventional and Islamic finance would be able
to co-exist and prosper under the same (God’s?) sky.

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