Ethics as Performance: Islamic Fund Managers as Agents of Financialization

• In Event: Muslim Moralities in Asian Capitalisms - Sponsored by the South Asian Muslim Studies Association (SAMSA)

Abstract

The turn to finance – empowering financial intermediaries in national, corporate, and household domains – challenged both secular and religious authorities globally. This increasing dominance of finance within individual and collective lives, later termed financialization, intersects in intriguing ways with the burgeoning market for Islamic finance. Proponents of Islamic finance view it as an attempt to reassert social control within capital markets by seeking to re-regulate to favor risk-sharing and productivity. As these economic theories are performed, however, new financial ‘worlds’ may be produced. The emergent worlds produced by Islamic economic theory, through financial inclusion and exclusion and the circulation of expertise within and between financial centers and religious authorities, are both revitalizing and transforming traditional loci of authority and power. Here, I examine the process of packaging and selling Islamic investment funds as a window into these transformations. Proponents and detractors of Islamic finance have pointed to the success of Islamically marked funds in avoiding the ravages of the 2007 financial crisis. Against these claims, however, ordinary investors remain consumers of financial products rather than intermediaries in the market for financial risks. This means that households ability to on-sell risks or participate in secondary markets are severely curtailed whether they hold Islamic products or not. As has been carefully documented in the US and Europe, households become the shock absorbers for the financial system in crisis. And, in the case of Southeast Asia, households seem to be increasingly relegated to similar roles, even as vernacular ethical traditions are catalyzed.

Author

• Laura Elder, Saint Mary's College Notre Dame