Islamic Finance and the New Technology Challenges

Islamic finance, as a new economic paradigm based on ancient principles and rules, needs to embrace the new IT opportunities in order to be up to date with the contemporary financial industry. This process will become a “bridge” between the past and the future of socially responsible financing. The world’s financial and economic environment in our days is marked with immense inequality and imbalance. With the emergence of the global capital structures, solely ruled by the principles of the financial markets, the main focus of the economy shifted from real entrepreneurship to a form of capital bureaucracy. The financialization of the economy is a crucial phenomenon of contemporary capitalism, which could lead the world economy nowhere. Structures such as hedge funds, venture capitals and private equities create no real value.  The main objective of such financial management firms is short term profits. By cutting costs (firing workers, reducing investments etc.) they have harmful impact on the companies they invest in. In order to evade deleterious effects on the economy, caused by the financialization, an interest free environment and financial technology (fintech) development need to be implemented. Islamic finance as a no-interest based intermediary can be fully embedded in such processes. By nature the Islamic mode of financing excludes the dealing with debt and purely monetary activity. The digital disruption can bring independence, shrink costs, and improve services as a whole. Blockchain is the technology which provides the contemporary base for development of the fintech. On one hand it enables maximum security of transactions and on the other it energizes crowdfunding. In the Islamic finance context of the profit and loss sharing paradigm, the new disruptive technology has the potential to reduce the risk and to increase productivity. In the end by increasing trust, blockchain and Islamic finance can mitigate debt-based financing

Evaluation of some key features of Islamic finance in non-Islamic economies

In recent years Islamic finance has steadily increased in popularity. In this respect, the research sets itself a task to evaluate some key features of Islamic finance in the Bulgarian financial market. To achieve this Fuzzy AHP method and deductive, inductive reasoning are used. The results show that the understanding of Islamic banking principles in Bulgaria has social banking characteristics. These characteristics are related to consumer expectations that can be defined as fundamental or basic such as the provision of a financial product or service, interest-free loans and securities with a social function for stakeholders. The results are unique and representative of the Bulgarian experts’ opinions, processed scientifically to showcase the potential of Islamic finance in the local financial market. Hitherto, presumably, no other research concerning Bulgaria has done such an evaluation. The main limitation of this research is the lack of Islamic financial institutions operating in the Bulgarian market. The research relies on the knowledge of local banking experts on Islamic finance principles. The findings can be applied in the decision-making process in the Islamic finance context