Islamic Finance Role in Preventing Crises Resulting from the Financial Opening-up and Liberalization Policies

Abstract

The Equity capital system is an arachnidan system, it is a fast spreading and fast collapsing system, therefore it is coming out of a crisis to fall in another. The history of this financial system reflects this fact in numbers and also in reality, as the distinguished western economy pioneers confessed that capitalism is a regular crises generating system by nature. The traces of this capitalism nature are more noticed recently according to the growing demand on the financial derivatives, forward sales and speculative fever dealings. But the truth is that the problem of these crises that occurs regularly within the system lies in its rapid transition across the world and also in the fact that any disturbance in one end of the world will rapidly transit to the other end as a lot of countries trend to follow open market, financial liberalization, share capitals’ free transition and free obstacles investment policies whether in multi parties commercial frame under the International Organization of Trade regulations or in the contest of the financial globalization through the liberalization of the long and short term capitals; therefore the infection of financial crisis is an inevitability.

In light of the growing global interest in solving this crisis especially at the level of the international financial and monetary institutions; Islamic alternative emerged dramatically in light of the immune that was featured on many of Islamic financial and banking institutions at a time when the world has witnessed the collapse of many giant global financial and banking institutions.

Key words: Islamic finance, Opening-up policy, financial liberalization