President Erdogan: Islamic Economics is the Key to Solve the Crisis

The 12th International Conference on Islamic Economics and Finance, the world’s most prestigious conference on Islamic economics and finance, has started on June 14-20, hosted by Istanbul Sabahattin Zaim University. Opening with the promotional videos of the participant organizations, the first day of the conference started with the speeches of the President of the Republic of Turkey, Recep Tayyip Erdogan; the Minister of Treasury and Finance, Berat Albayrak; and the Minister of Economy of Pakistan, Dr. Abdul Hafeez Shaikh. In his opening speech, the President of the Republic of Turkey, Recep Tayyip Erdogan said that “Islamic economics is the key to solve the economic crisis.”

The Rector of Istanbul Sabahattin Zaim University, Prof. Dr. Mehmet Bulut has reminded that the conference has a long-standing history, and said that these conferences play an important role in mobilizing research and innovation and in contributing to strategic knowledge.

President Erdogan: “Islamic economics is the key to solve the crisis.”

The President of the Republic of Turkey, Recep Tayyip Erdogan pointed out that with the new type of coronavirus (Covid-19) pandemic the whole world entered into a new period which has been experiencing radical changes and emphasized that even though this pandemic is primarily related to health, with its results, it has affected almost every area of our lives and caused aftershocks in many areas, from labor market to commerce; from personal relationships to public security.

Erdogan said that “Islamic economics is the key to solve the crisis” and continued his words as follows: “Over-financing has created an obese economic model that does not consider the social and human costs, and acts only with the concern of rent. It is necessary to extend the use of productions like sukuk for the financing of long term large infrastructure investments.” President Erdogan also underlined that they aim to make Istanbul, located at the crossroads of continents and cultures, the centre of Islamic finance and economy.

Albayrak: “Our aim is to make Turkey interest-free financial center of the world.”

The Minister of Treasury and Finance, Berat Albayrak emphasized that for the sustainable development, having a solid and sustainable financial structure is an essential condition for the financial institutions that provide fund to real economy.

Albayrak pointed out that the financial system, whose main function in the economy is to bridge between savings and real investments, cannot fulfil its task thoroughly with its current structure, and mentioned that the system which needs to contribute to the increase of production and prosperity may reach a position that can threaten the financial and economic stability. Albayrak continued his words as follows: “Participation financial institutions are strategically important for us. After the global financial crisis, the advantages of the participation financial system have been clearly seen, and the development of the sector gained momentum all over the world.”


Pakistan Minister of Economy: “Islamic finance is important to confront with the financial difficulties.”

Pakistan Minister of Economy, Dr. Abdul Hafeez Shaikh, emphasizing the potential of Islamic finance to help the developing countries in coping with the global financial crisis, pointed out that Islamic banking is growing rapidly in Pakistan.

Affirming the global impacts of the new coronavirus, Shaikh mentioned that exports and the incomes have been adversely affected, 16 million families have been supported with the government’s coronavirus relief fund. In addition, he underlined that Pakistan and Turkey have a very friendly relationships including politics, commerce and the commitment of the people.

Islamic economic tools should be used in this process

In the opening session, Vice President of Islamic Development Bank (IsDB) Prof. Dr. Zamir Iqbal; the Rector of Hamad Bin Khalifa University, Ahmet M. Hasnah; on behalf of the International Association for Islamic Economics (IAIE), Prof. Dr. Mabid Al-Jarhi; Vice General Director of Statistical, Economic and Social Research and Training Centre for Islamic Countries (SESRIC), Fadi Farasin; and Senior Researcher of Islamic Research and Training Institute (IRTI), Salman Syed Ali participated. In the session, the speakers emphasized the effects of the pandemic on the sustainable development and real economy, the importance of cooperation in risk sharing, collective mobility and the rise of Islamic economy and finance in this process. While the participants discussed the measures and solutions in the post-COVID-19 period and the global contributions of Islamic economy and finance as a modern academic discipline, it was highlighted that the Islamic economic tools should be used during this process.

Uysal: “We will continue to make decisions that our economy will need.”

Speaking at the special session, the President of the Central Bank of the Republic of Turkey (CBRT) said that they aim to support the post-pandemic recovery period and the financial system by taking the steps that will provide appropriate conditions to the real sector for their need of liquidity. He proceeded as follows: “We observe that by supporting the production and financial stability in the economy, the measures, aimed at overcoming this period with the least loss, support the liquidity and credit conditions of the financial sector and that the monetary transmission mechanism maintains its effectiveness.”


Akben: With the quick decisions in economy, the wheels have started to turn.

The Chairman of the Banking Regulation and Supervision Agency (BRSA) Mehmet Ali Akben states that as BRSA, by taking quick decisions during the coronavirus pandemic, they made the wheels turn in the economy, and records that “As BRSA, we have made nearly 50 arrangements during the period of combating the Covid-19 outbreak. Proactive regulation approach has demonstrated its importance in terms of more active coordination and management of the companies and sector and in turning the wheels of economy all over the world; and as the BRSA we contributed to these regulations. Now there is a culture of rapid reaction to events all over the world.”

Ulussever: Balancing function of Islamic finance finds application area in the world

Deputy Chairman of the Stock Exchange Commission (SEC) Ulussever said that the Islamic finance system distributes the risks between capital providers and its users in a balanced way and by conducting automatic balancing in economic activities, it significantly reduces the systemic risks and emphasized that this has gone beyond being a model in particular to Islamic world and found application area all over the world.

The 12th International Conference on Islamic Economics and Finance Completed Successfully

It has been more than 45 years since the first Conference on Islamic Economy and Finance which held in Mecca in 1976. This year, hosted by Istanbul Sabahattin Zaim University, between June 14-20, and conducted with the coordination of Islamic Research and Training Institute, the establishment of Islamic Development Bank, the 12th International Conference on Islamic Economics and Finance focused on the themes as Islamic Financial Markets in Turkey, Entrepreneurship, Global Financial Architecture, Digital Economy, 4th Industrial Revolution, Good Governance and Sustainable Development.

In this year’s conference, while highlighting the issues that need to be considered more for the ‘Sustainability and Economic Development’ within the scope of 4th Industrial Revolution, there were made 472 applications from 40 different countries around the world. A total of 132 papers were presented in the sessions which would focus on the topics of Islamic Finance, Empowerment and Sustainability, SDGs, and Islamic Economy and the Role of Entrepreneurship.

4th Industrial Revolution and Islamic Economy

On the second day of the conference, the first session, moderated by Assoc. Dr. Suayb Gundogdu from Sabahattin Zaim University, Department of Business and Management Science, concentrated on “4th Industrial Revolution and Islamic Economy.” While Riaz Ansary, from the International Shari’ah Research Academy for Islamic Finance (ISRA), evaluated how artificial intelligence, big data, 5G, internet of things and other rapidly emerging technologies can affect the world and especially Muslims; Mohammad Mahbubi Ali, from International Institute of Advanced Islamic Studies, in his speech titled “Overcoming Inflation and Unemployment through Zakat: Revisiting the Tradeoff Theory” focused on both unemployment and inflation in terms of zakat.

In his speech, titled “Are They Closer or Farther to Each Other? Club Convergence in the Member Countries of the Organisation of Islamic Cooperation (OIC)” Lokman Gunduz, from Sehir University, questioned whether the per capita income of OIC countries started to form groups around a single fixed state or different states. In his speech, titled “Nexus Between Investment and Economic Growth within Endogenous Growth Framework in Bangladesh: Crowding-in or Out?” Monuril Islam from Dakka University focused on the impact of both public and private investments on economic growth. In his speech “A Qualitative Assessment of Risks of the IR4.0 and SDG Aligment: A Complex System Approach” Ildus Rafikov from the International Islamic University of Malaysia, assessed the potential risks of SD4.0 and how the sustainable development goals from the perspective of a complex system are correspond to the risks and benefits of the Fourth Industrial Revolution.

In his speech, titled “Effects of Technological Change on Selected Labor Sectors in Turkey: Analysis Based on ARDL Approach” Fatih Al from Istanbul Sabahattin Zaim University assessed the destructive effects of new technologies, to the extent that they create a paradigm shift in the Fourth Industrial Revolution, on the businesses, economies and people’s lives.

Digital Economy was Discussed

The parallel session, titled “Digital Economy” was moderated by Burhan Uluyol from Istanbul S. Zaim University. In his speech “Factors That Determines Investment Based Fintech Crowd Funding in Malaysia” Dzuljastri Abdul Razak from the International Islamic University of Malaysia, discussed the crowd funding as an investment tool through fintech and the factors determining the investment through crowd funding by using Technology Adoption Model (TAM) in Malaysia. In her speech, titled “Strategic Niche-Management on SocioTechnical Transition: Case of Islamic Fintech” R. Gratiyana Ningrat focused on the findings of the empirical innovation process in two newly established Islamic FinTech P2P Finance platforms from the Strategic Niche-Management Approach (SNM). In his speech “Revolutionizing Ijarah through FINTECH” Suheyib Eldersevi from Istanbul S. Zaim University examined the adoption of the latest trend in the world of Fintech against Islamic Fintech which focuses mostly on the Ijarah Contract that is used for vehicle financing in Malaysia.

In the speech, titled “Acceptance of Islamic Financial Technology (FinTech) banking services by Malaysian users: An Extension of Technology Acceptance Model” Imran Mahboob Shaikh from Mohammad Ali Jinnah University, examined the determinants that affect the acceptance of bank users to Islamic Financial Technology (FinTech) by expanding the Technology Adoption Model (TAM) in the context of Malaysia. In the speech, titled “Determinants of Blockchain Technology Adoption among Zakat Institutions in Malaysia:A Proposed Integrated Model” Shamsuddeen Muhammad Ahmed from Kano State Polytechnic focused on the blockchain technology as the latest technology that can transform and facilitate Zakat institutions.

Lastly, in the speech “FinTech Adoption and its Investment Impact in Islamic Social Finance: The Case of Zakat” Mohamed Cherif El Amiri from Istanbul S. Zaim University, concentrated on the Islamic Financial Technology (i-FinTech) as a rapidly developing and deepening concept due to the rapid progress in computers and the adoption of i-FinTech in zakat institutions.


The Comparison of Ottoman Waqfs and Interest-Based Western Finance

Following the morning sessions, in his opening speech titled “Ottoman Waqf based and Western European Interest based Financial Systems (1450-1900): Comparative Overview,” the Rector of IZU, Mehmet Bulut, discussed the Ottoman Waqf system, the cash waqfs, and the religious debates surrounding these concepts among the Ottoman scholars. Giving more information about the establishment of cash waqfs, Bulut said that the use of interest-free operating system by the cash waqfs has opened the road for them to be seen as the pioneers of modern Islamic financial institutions. Listing the principles of the Ottoman Waqf-based financial system as Islamic/ Ethical Methods, functioning as microcredit mechanism, focusing on regional institutions and the needs of society, the Rector of IZU compared this system in the Ottoman world with interest-based Western financial institutions.

An In-Depth Look at the Tools in Islamic Finance

In his speech “A Broad View on Islamic Finance” Prof. Murat Cizakca from KTO Karatay University, introduced modern Islamic finance tools and their main features and emphasized that there has been not a fundamental change in the functioning of Islamic finance. Noting that the Islamic banks have succeeded to transform the largely non-banking Islamic societies into banking societies, Cizakca remarked the importance of mudaraba as an Islamic finance tool and of waqf as a non-banking financial tool. He also highlighted the “esham share” and its use in the synthesis of venture capital and added that both waqf stocks and esham provide long-term capital for young entrepreneurs through mudaraba (venture fund).