On Setting the Direction of Future Research in Islamic Economics and Finance

Salman Syed Ali

16 Nov, 2021

Ideas generate knowledge, research develops and shapes it. But what we choose to explore is often subjective. Hence it is important what questions we ask and how we formulate them.

I want to present six points for what matters in setting the direction of research in Islamic economics and finance. The purpose here is not to create a list of specific topics but to point out the future direction of research, the broader areas, and the future needs of the discipline to carry out a successful and useful research program.

1. Know how knowledge and research progress

We think knowledge continuously progresses in a linear upward direction with time. However, the reality is that knowledge moves in a very non-linear form, sometimes progressing sometimes regressing and sometimes it even gets destroyed and a new thread is started. Historically, we can also witness that many nations that got destroyed, the knowledge they created sometimes also disappeared with them.

Figure 1: How knowledge progresses (Source: Author’s own depiction)

It is also important to understand that what questions to pursue and what is worth knowing cannot always be answered scientifically. Uncertainty of direction requires that researchers must use their intuition and value judgments. Therefore, the importance of the dua from hadith: اللَّهُمَّ إِنِّي أَسْأَلُكَ عِلْمًا نَافِعًا.  O’ Allah, I ask you for knowledge that is beneficial. (Not any knowledge).

It is also important to understand how the research is recognized and appreciated. New research that deepens or expands the knowledge around the issues that are under discussion in that era is readily noticed. Research on topics that are no more in focus loses its relevance. However, the path breaking ideas and even the old, unsettled issues can be brought into focus if framed in the context of contemporary debates but require more efforts.

Figure 2: How research is recognized

2. What is happening in conventional and Islamic economics: Evidence from two Surveys

This brings us to what is currently happening in the conventional and Islamic economics and finance. Two interesting and useful survey and research articles have been published recently in September 2021.

Using responses from over 10,000 economists to a survey questionnaire, Peter Andre and Armin Falk’s  “What’s worth knowing in economics?”  explores what topics economists think are important and should be pursued. The distribution of average responses on each JEL topic is compared with what actually gets published in the top 400 journals. Two findings relevant for us from this study are: First, “quantitative discrepancies between reality and economists’ preferences”. For example, most economists preferred to see more research in Health, Education and Welfare but less is published in those areas. Most economists do not deem Finance as much important topic  as the percentage of papers published on that topic. Second, the economists think “economic research should become more policy-relevant, multidisciplinary, risky and disruptive, and pursue more diverse topics.”

Figure 3: Differences between the average preferred and the actual JEL topic distribution

If we reflect on these insights, then we find that what is going on in the Economics profession is not very different from what are the impressions of Islamic economists regarding their own discipline.

Moreover, the topics that were central in the early period of Islamic economics are no longer the primary focus of attraction of research now; they are replaced by other topics. Even though the fundamental issues are still unresolved awaiting further investigation.

In the second study, Ezzedine Ghlamallaha, et al. chart the shifting focus of “The topics of Islamic economics and finance research”. The study documents these changes by classifying the topics in 11 major themes and tracking the movement of those themes from 1979 to 2018. The theme classification is done using Artificial Intelligence methods applied to the contents of articles published in SCOPUS indexed journals. This is a probabilistic topic modeling that blends machine learning and natural language processing and looks for the co-occurrence of keywords. Tracking these topics over each time period, Figure 4 shows how these 11 major topics have changed in their importance. Islamic banking had high importance 40 years ago and it is still important. Economic philosophy and history were deemed important in the early 1980s, but its attraction quickly declined. It is now the least important topic in terms of Islamic economics articles published in SCOPUS indexed journals. The topic of financial assets quickly gained the most importance over the last 40 years. Literature on contracts and their enforcement saw many ups and downs. Corporate governance issues became prominent. And issues of philanthropic and inclusive finance gained significant attention.

Figure 4:

While this gives a good picture of the changes in topics of interest over four decades, it is not a comprehensive picture because a great deal of research on Islamic economics and finance appears in journals and books that are not indexed in SCOPUS. A considerable amount also emerges in the form of reports, policy papers from institutions and organizations and conference presentations.

3. Fundamental issues are important

Development of clear understanding of some fundamental issues of theory and knowledge were left midway, either in the chase for quickly producible and publishable papers or due to business pursuits that transformed Islamic finance into Islamic financial services industry.

In hindsight, one thinking is that Islamic economics and finance should have prioritized the establishment of zakat and welfare over the establishment of Islamic banking in its early days. This could have taken away the profit motive, avoided the unbalanced growth of finance over economics, and the premature run for practice without theory.

Another gradual change in Islamic economics has been it becoming self-confined largely to the Muslim audience and even to an already likeminded group, as documented in a study presented in the 7th ICIEF about the vision for future research in Islamic economics.

The topics have also been narrowed down to a few that were pioneered by the early Islamic economists. Whereas the new concerns of economics have made economics much wider in scope. These new interests include: Globalization and the interconnected world; then shift to Localization and self-sufficiency after COVID-19 experience; Environmental concerns and Circular Economy; Sustainable Development; Technological Changes; Work and Flexible Labor Markets; Monetary Economics; Financial Crises; Debt and Housing; Liquidity Crunch; New forms of Currency. The interests have also moved to issues in Living standards; Family; Sociological and Moral Challenges; Poverty in different forms; Human Dignity; and Institutions. Addition of Data Sciences within economics, the rise of Artificial Intelligence; Blockchain and Decentralized Finance; as well as importance of Faith and Trust. These issues are a far cry from the scarcity focused economics and the socialism vs capitalism centered debates of the past.

4. Setting the direction for the future (Agenda for research)

Figure 5: The need for creating agenda for research

There is a need to create a new balanced agenda for research articulating Key Questions. The addressees should be individuals and research groups. This research agenda should utilize ideas for decentralized sourcing and research inputs, and promote multidisciplinary collaboration. It should not only raise the pertinent questions but should also encourage fundamentals, theoretical modeling, empirical studies, data needs and data generation techniques, policy studies, and emphasis on experiments and pilot implementations. It should:

  • Focus on Islamic approach– this will help and distinguish the contributions from all others. This is not to say that you start doing fiqh or confine yourself to Islamic jargon while the same thing already exists without Islamic jargon.
  • Focus on alternative economic paradigm.
  • Focus on solving problems and resolving dilemmasencountered in economic and social life as well as the dilemmas faced by the conventional economics and finance. This is contrary to trying to build an abstract theory.

Only broad areas are mentioned here. Call for Papers of the 13th ICIEF already gives a detailed list of topics, as was done by 12th, 11th , 10th, 9th, and 8th ICIEF. One of the earliest published agenda for research in Islamic economics was “A Survey of Issues and A Programme for Research in Monetary and Fiscal Economics of Islam” by Dr. Munawar Iqbal and Dr. Fahim Khan published in 1981 that listed topics and articulated key questions under each topic.

5. Research is not enough for its adoption (implementation requires push)

It is true that a good and bright idea has the potential to drive out bad ideas. So, potentially, good economics and finance should drive out bad economics and finance. However, the existence of potential to replace does not mean good ideas will automatically prevail. Good ideas need a push to dislodge the entrenched ideas and systems before they are widely accepted. Therefore, just writing papers is not enough. We need to ensure that useful knowledge is developed and implemented in practice at least as a prototype. For this to happen, relationships must be built in two ways, long-term, trusting relationships between researchers and the people who need the new knowledge that is generated. It also requires the dissemination of research in appropriate form through the web, social media, and research media. Good and correct ideas can push out bad and wrong ideas, but not necessarily just on the strength of the idea itself. Practical demonstration is a must.

6. Future direction of research also depends on the training for research

Four dimensions need to be emphasized in the training of young researchers in Islamic economics and finance. These are research and subject matter skills, understanding of the purpose, ethics, and readiness for research dissemination.

Table 1: The four dimensions for emphasis in training

We have covered six points that are important to set the direction for future research in Islamic economics and finance. We hope to make progress on these lines with the collective efforts from universities, research institutions, and individual economists interested in taking forward the discipline of Islamic economics and finance.


This blog is based on my presentation in the 1st Islamic Economics Education Summit in collaboration with the 7th International Symposium on Islamic Economics and Finance Education held online on 28th October 2021. The event was organized by Bank Indonesia, in collaboration with The Indonesian Association of Islamic Economist (IAEI) and The National Committee of Islamic Economic and Finance (KNEKS) and others.

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