The Role of Islamic Finance in Global Economic Stability and Security

Abstract

Islamic finance, adhering to Sharia law, offers a unique alternative to conventional financial systems, emphasizing principles like risk-sharing, asset-backing, and ethical investing. This paper explores how Islamic finance contributes to global economic stability and security, investigating its role in mitigating financial crises and promoting sustainable development. By analyzing recent literature and case studies, the study highlights the strengths of Islamic finance in fostering resilience and inclusivity within the global financial system. The findings suggest that while Islamic finance presents promising benefits, its integration into the global economy requires addressing certain regulatory and operational challenges. This paper provides a comprehensive overview of the mechanisms through which Islamic finance impacts economic stability and offers recommendations for future research and practice.