After the credit crunch: the future of Shari’ah compliant sustainable investing

摘要

Purpose – The purpose of this paper is to examine the role of Shari’ah compliant sustainable investing in the light of the credit crisis and catastrophic climate change. Design/methodology/approach – The paper discusses that the climate change, natural resource shortages, fuel crisis and global financial crisis, etc. will not go away just because there is a recession. In this regard, Shari’ah compliant finance has a broader responsibility to consider societal goals and should be preparing for the post-credit crunch world. The paper evaluates the performance of Shari’ah compliant sustainable funds using the traditional measures of performance in relation to risk-adjusted benchmarks to see if there is any ethical effect. Findings – The paper advocates that preventing future market meltdowns and avoiding catastrophic climate change requires a new era of longterism in Shari’ah compliant sustainable investing. The study assesses the performance of the Shari’ah compliant sustainable investing. The result shows that Shari’ah compliant funds outperformed the conventional benchmark and therefore, the challenge for Shari’ah compliant sustainable investing is not to become like conventional investing but, rather, to replace. Research limitations/implications – Shari’ah compliant sustainable finance is a recent phenomena and therefore, rigorous analytical predication of Shari’ah compliant sustainable investing variables are at present not possible using evolutionary and complex system approaches; however, such system can be fruitfully studied in future through simulation methods and certain types of econometric modeling when the long-term data will be made available. Originality/value – As the credit crunch has evolved into a full-blown economic crisis, many have turned to the Shari’ah compliant finance to provide a route map out of recession. With an increasing number of conventional banks and corporations struggling to find funds to support their businesses, Shari’ah compliant financial institutions represent a potential solution to bridge the liquidity gap in the global markets.