CHAPTER 1 A Brief History of Globalization and Islamic Finance 1

1.1 A Brief History of Globalization 2

1.2 How Complete Is Globalization? 7

1.3 A Brief Introduction to Islamic Finance 11

1.4 Islamic Finance and Globalization: Convergence or Divergence? 26

CHAPTER 2 The Consequences of Globalization: Convergence or Divergence with Islam? 29

2.1 Theoretical Consequences of Globalization: Growth, Income Distribution, Poverty Alleviation, and Regulation 29

2.2 Some Empirical Consequences of Globalization 35

2.3 Financial Globalization 41

2.4 Basic Islamic Economic and Financial Doctrines and Globalization 47

2.5 Convergence or Divergence? 53

CHAPTER 3 Islamic Finance, Conventional Finance, and Globalization 59

3.1 The Development of Islamic Finance 59

3.2 The Development of Conventional Finance 68

3.3 Islamic and Conventional Finance: The Impactof Globalization 70

3.4 Financial Stability and the Emerging Relationship between Islamic and Conventional Finance 75

CHAPTER 4 Recent Developments in Conventional Finance, Financial Globalization, and Islamic Finance 79

4.1 Introduction 79

4.2 The Role of Financial Systems and the Stability Characteristics of the Conventional Financial System 80

4.3 A Different Explanation for the Financial Crisis of 2007 94

4.4 Islamic Financial System and Lessons from the Recent Crisis 111

4.5 Summary 119

CHAPTER 5 Empirical Trends in Conventional and Islamic Financial Globalization 121

5.1 Trends in Conventional Financial Globalization 121

5.2 Growth in Islamic Finance 137

5.3 Convergence or Divergence? 147

CHAPTER 6 Key Considerations in Developing an Islamic Financial System 149

6.1 Lessons from the Conventional Financial System 149

6.2 Gaps in the Islamic Financial System and its Practice 157

6.3 Policy Recommendations 163

6.4 Concluding Remarks 171

CHAPTER 7 Conclusions and the Future of Islamic Finance 173

7.1 The Future of Globalization 173

7.2 The Evolution of Financial Globalization 177

7.3 The Expansion of Risk Sharing 179

7.4 The Likelihood of Convergence 180

References 187

Index 211