Islamic finance education at graduate level: Current position and challenges

Over the past few decades Islamic finance has been the fastest growing segment of the global system. The fast growing market has necessitated corresponding expansion of education and training facilities to increase appropriately the supply of skilled manpower. This called for a stock taking of the adequacy and suitability of the existing educational and training facilities in several directions. IRTI has launched a project to accomplish this work. The present working paper looks at the range, sufficiency and quality of education in Islamic finance at the graduate level. It uses Malaysia as an illustrative case because the country is in the forefront of this development and has made several innovations and pioneering efforts in the field. This work finds that the graduate level finance education is not currently in a very satisfactory state. This is partly reflected in the increasing departure of financing expedients from the major goals of the Islamic system. The difference between the legality of transactions and their permissibility is usually ignored giving rise to perilous divisions at the juridical level. Validation of mixed banking opened the doors for convergence with the mainstream presumably to the disadvantage of Islamic finance long run, in education also. Some other points of significance that emanate from the foregoing discussion are in brief as under. 1. The unidirectional convergence of Islamic finance with the mainstream in practice is directing its educational approach and structure as well. In both cases it has some immediate advantages but has also potential to promote divisive and deviant tendencies in the area of Islamic finance. There already is some evidence on the point and has to be guarded against. 2. There is much diversity in the academic programmes and course structures in the area of Islamic finance within and between public institutions. Some degree of standardization with flexibility margins is desirable, feasible as well. Establishment of layered mutual consultation bodies and sharing of information may help. 3. Creation of research environment, foundational infrastructures based on positive filtering approach, sharing of knowledge and experience, cooperative teaching and ample funding may help build the critical mass to speed up research and build skills in the area of education. 4. Since the total number of students seeking doctoral degrees is not very large, their admission may be restricted to selected institutions where faculty and facilities could be strengthened to promote excellence. This will also allow pooling of teachers coupled with stricter screening of the students. The final product could thus be improved at reduced cost. 5. Academic administration must in general synchronize with academic hierarchy. Contribution to knowledge, research and supervision ought to be recognize and appropriately rewarded strictly on merit. 6. There should be arrangement for preparing reading material integrating mainstream positions and Islamic requirements. Classificatory approach that has mostly been followed so far has to go. Teachers should invariably be associated, rather lead such projects. The effort would produce Shari’ah literate economists. Advisory boards are today exclusively loaded with Shari’ah scholars who are often poor economists. Having both fuqha and economists on the boards would improve compliance. . This could have helped to avoid the controversy and confusion as is found today in the case of Sukuk markets.