GRM 2010 GRM 2011

Abstract Details

Family Name:
First Name:
Clement Moore
Title of Paper:
Knowledge Networks of Financial Innovation: Malaysia and the Middle East
Paper Proposal Text :
Diversification of the oil-exporting economies of the GCC is a daunting task, given the scarcity of skilled labor and technological innovation, most of which is imported. Any transitions to a knowledge-based economy presuppose not only transnational knowledge networks but ways of translating them into goods and services outside the petroleum sector. This paper focuses on cultural products rather than manufactures (implied by science and engineering knowledge flows) to take advantage of the GCC’s locational advantage at the heart of Muslim world. Islamic finance, in particular, offers a challenging field for “product” innovation and related services in the field of Islamic finance.

Originally in 1975 the transnational knowledge networks involved in creating and developing financial instruments were principally inter-Arab, channeled through the Islamic Development Bank, based in Jiddah, and two Saudi privately owned transnational groups, Faisal and Al-Baraka. Over the past decade, however, the principal source of new instruments, notably the sukuk (Islamic bonds), has been Malaysia. This paper will trace the new linkages prefigured by the establishment in 2002 in Kuala Lumpur of the Islamic Financial Services Board headed by the founder of the Bahrain based Accounting and Auditing Organization for Islamic Financial Institutions (AAOIFI). The Central Bank of Malaysia sponsored the creation in 2005 of Global University of Islamic Finance, also known as the International Centre for Education in Islamic Finance (INCEIF). The paper will focus on its linkages with other centers of Islamic finance research and learning in the GCC countries and beyond. The broader question is whether Islamic finance can take on a life of its own, independent of the pious desires of wealthy Gulf millionaires to diversify their portfolios.

INCEIF in its words aspires to be “The world’s premiere university for Islamic Finance bring[] together leaders, academicians, researchers and professionals from all corners of the globe to create a vibrant work environment. The seamless integration of diverse cultures brings about a positive, productive and passionate atmosphere that is as inspiring as it is challenging.” Do these aspirations translate into a development of Islamic financial instruments –from microfinance to huge equity and sukuk packages-- that the more conservative GCC centers can accept and further develop? Are the diverse schools of thought being blended into world class standards for “participatory” finance? Islamic finance, developed through these mainly South-South flows of knowledge and service transfers, may vitally contribute to the diversification of GCC economies.