Ethical discourse is commonly not a priority in a conventional finance syllabus. Moral sentiments often take a back seat to market sentiments, even in shaping the direction of ethical finance business. This anomaly persists despite growing interest in ethical finance. Taking an interdisciplinary and diverse perspective, this book enriches the evolving definition and scope of ethical finance literature by focusing on actors, products and regulation that shape markets. Considering the gap between theory and practice, this book bridges academic and professional knowledge in unpacking ethical and governance issues in the financial industry. In an effort to include as many viewpoints as possible, regardless of popularity or who holds them, the book editors gathered thoughts from diverse fields, including accounting, economics, ethics, finance, governance, law, management, philosophy and religion. Appealing to academic and non-academic stakeholders with an interest in ethics and finance, this book is the result of and a testament to a distinct educational and public engagement project that included different generations and communities, for future reference.
Author(s): Marizah Minhat, Nazam Dzolkarnaini
Series: Palgrave Studies in Impact Finance
Publisher: Palgrave Macmillan
Year: 2021
Language: English
Pages: 299
City: Cham
Foreword
Preface
Contents
Notes on Contributors
List of Figures
List of Tables
1 Introduction
1 International Platform
2 Intellectual Activities
2.1 Perspectives on Ethical Finance and Investment 2017
2.2 Ethical Finance and Governance in Emerging Markets (ft. Belt and Road Initiative) 2018
2.3 Ethical Finance and Community Development Forum 2018
2.4 Management, Governance and Ethical Finance Conference 2019
3 Abstracts of Chapters
4 Part 1: Actors
5 Part 2: Products
6 Part 3: Regulations
7 Navigating the Future
References
Part I Actors
2 Does Professionalism in Financial Services Have a Future?
1 Professionalism—A Definition
2 Rulers and Regulators
3 Culture and Competition
4 Public Concern
5 Drivers of Change
6 Big Bang
7 Money—The Great Motivator
8 The Financial Crisis
9 Restoring Trust
References
3 Boardroom Morality and the ‘Fit and Proper’ Test: An Aristotelian Perspective
1 Introduction
2 The Philosophy of the ‘FIT’
3 ‘Reputation’
4 The Indispensability of Character
5 Aristotle’s Particularism
6 Confronting the Question of Character
7 Conclusion
References
4 Optimising Employee Engagement Through Effective Ethical Leadership: A Case Study of a Canadian Based Insurance Company
1 Introduction
2 Literature Review
2.1 Autocratic Leadership Style
2.2 Democratic Leadership Style
2.3 Laissez-Faire Leadership Style
2.4 Transactional Leadership Style
2.5 Transformational Leadership Style
2.6 The Concept of Employee Engagement
2.7 Link Between Leadership Style and Employee Engagement
2.8 Ethical Dilemmas of Leadership and Organisational Ethics
3 Research Methodology
3.1 Research Instruments
3.2 Sampling Strategy
4 Data, Findings and Discussion
5 Conclusions
5.1 Recommendations for Further Study
Appendix A: Impact of Leadership Styles on Engagement
Appendix B: Action Plan to Optimise Employee Engagement
References
Part II Products
5 A Christian Approach to Interest
1 Introduction
2 Seven Snapshots
2.1 Ancient Greece and Rome
2.2 The Old Testament
2.3 The First Few Christian Centuries
2.4 Early Medieval Europe
2.5 The Sixteenth Century Reformation
2.6 Up to the Mid-Twentieth Century
2.7 1950 to the Present
3 Interest and Christian Ethics Today
4 The Question of Interest Today
4.1 What Exactly Is ‘interest’?
4.2 The Benefits of an Interest-Based Banking System
4.3 What Shook the System
4.4 The Arguments Against Interest
4.5 Any Serious Change Would Require at Least Five Things
5 Conclusions
References
6 The Integrity of Islamic Finance
1 Introduction
2 Theory
3 Practice
3.1 Murabahah
3.2 Al-Ijarah Thumma Al-Bai’
3.3 Sukuk
4 What Factors Could Plausibly Explain the Gap?
4.1 Standard Setters
4.2 Perverse Incentives, Moral Hazard or Corruption?
5 Conclusion
Appendix A: Simplified Sukuk Structure with a Sale Agreement vs Sale Undertaking
References
7 Diversity in Ethical Funds
1 Introduction
2 Definition and Terminology
3 History and Motivations
3.1 Historical Development
3.2 Motivations
4 Ethical Investment Mechanisms
4.1 Asset Screening Strategies
4.2 Ethical Fund Styles
4.3 Relationship Between Asset Screening Strategies and Ethical Fund Styles
5 Growth of Ethical Funds
5.1 Regional Growth
5.2 Growth in the UK
6 Development in Academic Literature
6.1 Performance of Ethical Funds Compared to Conventional Funds
6.2 Performance of Different Ethical Fund Styles
6.3 Risk Exposure of Ethical Funds?
7 Conclusion
References
8 Investing Ethical: Harder Than You Think
1 Introduction
2 Ethical Investments: Why and How?
3 Performance of Ethical and Non-ethical Investments
4 Conclusion
References
Part III Regulations
9 Regulating Islamic Finance in the UK: Issues and Possible Solutions
1 Introduction
2 The Distinctive Characteristics of Islamic Finance
2.1 Shariah as a Legal Foundation
2.2 Profit/Loss/Risk Sharing Contract
2.3 Trading Contract via Murabahah
2.4 Alternatives to Derivatives
2.5 Sukuk as Complex, Hybrid or Structured Securities
3 The Regulation of Islamic Finance in the UK
3.1 The FSMA 2000 and the ‘Twin Peaks’
3.2 Shariah and Self-Regulation
3.3 International Regulation and Soft Law
3.4 Regulating Mudarabah Capital as Liabilities
3.5 Regulating Murabahah as Interest-Based Debt Financing
3.6 Regulating Sukuk as Interest-Based Securities
4 Issues with the Existing Regulatory Framework
4.1 Shariah Compliance Risk
4.2 Restricted Growth of Legitimate Profit/Loss/Risk Sharing Instruments
4.3 Lack of Transparency, Legal Uncertainty and Risk
4.4 Façade
5 Proposal to Improve the Current State of Regulation
5.1 To Standardise Rules on Shariah Supervision
5.2 To Regulate Mudarabah Capital as Equity
5.3 To Improve Accounting and Disclosure Rules for Murabahah and Sukuk
6 Conclusion
Appendix A: An Example of Ijara-Based Sukuk Structure
References
10 The Debt Burden of Social Enterprises: How Choices Around Legal Form and Purpose Can Impact the Funding Options for Social Entrepreneurs
1 Funding Good
2 Money, Money, Money
3 What Is Your Purpose?
4 The Gender of the Founder
5 Covid-19
References
11 Ethical Issues in Financial Stress Testing
1 Introduction
2 Fundamentals of Financial Stress Testing
2.1 The Concept of Stress Testing
2.2 A Brief History of Stress Testing in Finance
3 Ethical Considerations
3.1 Why Is Ethics Necessary in Finance?
3.2 What Is Ethics in Finance and How to Assess It?
3.3 A Normative Approach to Ethics in Financial Stress Testing
4 Financial Stress Tests and Ethics
4.1 Stress-Testing Portfolios—Do Good Numbers Imply Good Ethics?
4.2 Stress-Testing Financial Systems—Assistance in Promoting Financial Stability
4.3 Stress-Testing Banking Systems—Rules and Their Interpretations
5 Summary
References
12 The Ethical Considerations for a New Model of Intellectual Property Protection Under Sharia Law Principles in the GCC States
1 Introduction
2 Overview of Sharia Law Principles
2.1 Primary Sources of Sharia Law
2.2 Overview of Secondary Sources of Sharia Law
2.3 Criticism of Secondary Sources of Sharia Law
2.4 Ethical and Unethical Conduct Under Sharia Law
3 Classifying Intellectual Property Law
3.1 No Quranic Reference for Intellectual Property Law
3.2 Inferential Reasoning for Intellectual Property Law
3.3 The Sunnah on Property as a Natural Right
3.4 Quranic Proprietary Rights to Justify Intellectual Property Law
4 Quranic Reform on Property Law
4.1 Linking Theft of Property to Intellectual Property Infringement
4.2 Sharia Principles on Mutual Consent
4.3 Defining Intellectual Property Infringement
4.4 Sharia Sources on Contract Law
4.5 Sharia Sources on International Transactions
4.6 Sharia Sources on Public Interest
4.7 Sharia Sources on Economic Gain
5 Previous Work on Sharia and Intellectual Property Law
5.1 Sharia and Intellectual Property
5.2 The Religion Loyalty Index
6 Conclusion
References
Index
