Islamic Perspective for Sustainable Financial System
Perception and Implementation of Sustainability in Islamic Firms: A Survey on Institutional Customers Of Islamic Banks in TurkeyMehmet Saraç, Fatma Altun
The negative externalities of the capitalist paradigm and irresponsible financial system have boosted the demand for integrating sustainability into the economic system as a key component and led to the development of new financial products and structures to achieve sustainable development goals. This global trend, in fact, facilitates a convergence towards the Islamic principles in economics and finance. Islamic economics, in essence, ensures such a production and distribution mechanism that the sources are not exhausted at the cost of other regions and future generations. The crucial question is, however, whether those firms that are supposed to comply with the principles of Islamic economics have really understood and adopted the concept of sustainability. Since the majority of customers of Islamic banks consist of such firms, we in this study attempt to reveal the current perception and implementation of sustainability from the perspective of institutional customers of Islamic banks in Turkey. Our findings show that while the basic goals set forward by sustainability, such as social equity, just income distribution, good governance, and preserving the resources and environment are conceptually embedded in Islamic finance, the institutional customers of Participation Banks cannot sufficiently integrate these principles into their business processes. In addition, firms’ approaches and practices toward the sustainability differ depending on their ownership structure, operational quality, and number of employees. Those firms whose ownership and operations are more international and have a number of employees greater than 50 comply with sustainability considerably more than others.