Accounting and Pseudo Spirituality in Islamic Financial Institutions

Nunung Nurul Hidayah, Alan D Lowe, Margaret Woods

Research output: Contribution to journalArticle

Abstract

The global financial crisis was followed by calls for a transformation of conventional finance, towards more ethico-aesthetic models. One avenue was to consider the alternative aesthetic of Islamic financial institutions (IFIs). IFIs offer profit-loss sharing (PLS) schemes as a distinctive spiritual alternative to conventional investment products. IFIs ontotheology clashes with the epistemology of modern banking and finance. The accounting for PLS creates tensions due to practical complexity that militates against implementation of the authentic Islamic financial contracts. This paper seeks to identify the role of accounting in IFIs' practice of interpretation to resolve the struggles that have taken place around the implementation of PLS schemes
as a means of spiritual based financial alternatives. We explore how IFIs use accounting in rendering notions of spiritual/prophetic values applicable to practice or how it colludes against their implementation. Our study adopts a qualitative research methodology, framed around 40 interviews and observations of PLS implementation in IFIs in five Muslim countries in Asia and the Middle East, and one in the United Kingdom. We combine the literature on accounting and religion with the ideas/concepts from the literature on religion in organizations, political economy and
Islamic law/finance. These perspectives enable us to better reveal how accounting works to reinvent spirituality. In our context we show how accounting mediates the conflicting interests and intentions that arise within the epistemological clashes that happen as the scared/religious strives to take its place in the capitalistic context of the conventional finance industry.
Original languageEnglish
Pages (from-to)22-37
Number of pages16
JournalCritical Perspectives on Accounting
Volume61
Early online date25 Sep 2018
DOIs
Publication statusPublished - 1 Jun 2019

Fingerprint

spirituality
finance
profit
aesthetics
Religion
banking
epistemology
Middle East
financial crisis
Islamic financial institutions
Spirituality
qualitative research
political economy
Muslim
interpretation
Law
Finance
industry
methodology
interview

Bibliographical note

© 2018, Elsevier. Licensed under the Creative Commons Attribution-NonCommercial-NoDerivatives 4.0 International http://creativecommons.org/licenses/by-nc-nd/4.0/

Keywords

  • Accounting in tensions
  • Profit-loss sharing
  • Pseudo spirituality
  • Religious/spiritual ideals

Cite this

Hidayah, Nunung Nurul ; Lowe, Alan D ; Woods, Margaret. / Accounting and Pseudo Spirituality in Islamic Financial Institutions. In: Critical Perspectives on Accounting. 2019 ; Vol. 61. pp. 22-37.
@article{0ab11c7f1d0c4a779942adf6e653c165,
title = "Accounting and Pseudo Spirituality in Islamic Financial Institutions",
abstract = "The global financial crisis was followed by calls for a transformation of conventional finance, towards more ethico-aesthetic models. One avenue was to consider the alternative aesthetic of Islamic financial institutions (IFIs). IFIs offer profit-loss sharing (PLS) schemes as a distinctive spiritual alternative to conventional investment products. IFIs ontotheology clashes with the epistemology of modern banking and finance. The accounting for PLS creates tensions due to practical complexity that militates against implementation of the authentic Islamic financial contracts. This paper seeks to identify the role of accounting in IFIs' practice of interpretation to resolve the struggles that have taken place around the implementation of PLS schemesas a means of spiritual based financial alternatives. We explore how IFIs use accounting in rendering notions of spiritual/prophetic values applicable to practice or how it colludes against their implementation. Our study adopts a qualitative research methodology, framed around 40 interviews and observations of PLS implementation in IFIs in five Muslim countries in Asia and the Middle East, and one in the United Kingdom. We combine the literature on accounting and religion with the ideas/concepts from the literature on religion in organizations, political economy andIslamic law/finance. These perspectives enable us to better reveal how accounting works to reinvent spirituality. In our context we show how accounting mediates the conflicting interests and intentions that arise within the epistemological clashes that happen as the scared/religious strives to take its place in the capitalistic context of the conventional finance industry.",
keywords = "Accounting in tensions, Profit-loss sharing, Pseudo spirituality, Religious/spiritual ideals",
author = "Hidayah, {Nunung Nurul} and Lowe, {Alan D} and Margaret Woods",
note = "{\circledC} 2018, Elsevier. Licensed under the Creative Commons Attribution-NonCommercial-NoDerivatives 4.0 International http://creativecommons.org/licenses/by-nc-nd/4.0/",
year = "2019",
month = "6",
day = "1",
doi = "10.1016/j.cpa.2018.09.002",
language = "English",
volume = "61",
pages = "22--37",
journal = "Critical Perspectives on Accounting",
issn = "1045-2354",
publisher = "Academic Press Inc.",

}

Accounting and Pseudo Spirituality in Islamic Financial Institutions. / Hidayah, Nunung Nurul; Lowe, Alan D; Woods, Margaret.

In: Critical Perspectives on Accounting, Vol. 61, 01.06.2019, p. 22-37.

Research output: Contribution to journalArticle

TY - JOUR

T1 - Accounting and Pseudo Spirituality in Islamic Financial Institutions

AU - Hidayah, Nunung Nurul

AU - Lowe, Alan D

AU - Woods, Margaret

N1 - © 2018, Elsevier. Licensed under the Creative Commons Attribution-NonCommercial-NoDerivatives 4.0 International http://creativecommons.org/licenses/by-nc-nd/4.0/

PY - 2019/6/1

Y1 - 2019/6/1

N2 - The global financial crisis was followed by calls for a transformation of conventional finance, towards more ethico-aesthetic models. One avenue was to consider the alternative aesthetic of Islamic financial institutions (IFIs). IFIs offer profit-loss sharing (PLS) schemes as a distinctive spiritual alternative to conventional investment products. IFIs ontotheology clashes with the epistemology of modern banking and finance. The accounting for PLS creates tensions due to practical complexity that militates against implementation of the authentic Islamic financial contracts. This paper seeks to identify the role of accounting in IFIs' practice of interpretation to resolve the struggles that have taken place around the implementation of PLS schemesas a means of spiritual based financial alternatives. We explore how IFIs use accounting in rendering notions of spiritual/prophetic values applicable to practice or how it colludes against their implementation. Our study adopts a qualitative research methodology, framed around 40 interviews and observations of PLS implementation in IFIs in five Muslim countries in Asia and the Middle East, and one in the United Kingdom. We combine the literature on accounting and religion with the ideas/concepts from the literature on religion in organizations, political economy andIslamic law/finance. These perspectives enable us to better reveal how accounting works to reinvent spirituality. In our context we show how accounting mediates the conflicting interests and intentions that arise within the epistemological clashes that happen as the scared/religious strives to take its place in the capitalistic context of the conventional finance industry.

AB - The global financial crisis was followed by calls for a transformation of conventional finance, towards more ethico-aesthetic models. One avenue was to consider the alternative aesthetic of Islamic financial institutions (IFIs). IFIs offer profit-loss sharing (PLS) schemes as a distinctive spiritual alternative to conventional investment products. IFIs ontotheology clashes with the epistemology of modern banking and finance. The accounting for PLS creates tensions due to practical complexity that militates against implementation of the authentic Islamic financial contracts. This paper seeks to identify the role of accounting in IFIs' practice of interpretation to resolve the struggles that have taken place around the implementation of PLS schemesas a means of spiritual based financial alternatives. We explore how IFIs use accounting in rendering notions of spiritual/prophetic values applicable to practice or how it colludes against their implementation. Our study adopts a qualitative research methodology, framed around 40 interviews and observations of PLS implementation in IFIs in five Muslim countries in Asia and the Middle East, and one in the United Kingdom. We combine the literature on accounting and religion with the ideas/concepts from the literature on religion in organizations, political economy andIslamic law/finance. These perspectives enable us to better reveal how accounting works to reinvent spirituality. In our context we show how accounting mediates the conflicting interests and intentions that arise within the epistemological clashes that happen as the scared/religious strives to take its place in the capitalistic context of the conventional finance industry.

KW - Accounting in tensions

KW - Profit-loss sharing

KW - Pseudo spirituality

KW - Religious/spiritual ideals

UR - https://www.sciencedirect.com/science/article/pii/S104523541830279X?dgcid=raven_sd_search_email

UR - http://www.scopus.com/inward/record.url?scp=85053804203&partnerID=8YFLogxK

U2 - 10.1016/j.cpa.2018.09.002

DO - 10.1016/j.cpa.2018.09.002

M3 - Article

VL - 61

SP - 22

EP - 37

JO - Critical Perspectives on Accounting

JF - Critical Perspectives on Accounting

SN - 1045-2354

ER -