ISLAMIC FINANCE AS AN ALTERNATIVE SYSTEM FOR ACHIEVING ECONOMIC JUSTICE AND STABILITY

Abstract

The global financial system, often criticized for its inherent instability and tendency to exacerbate inequality, has spurred the search for alternative economic models. This paper explores Islamic finance as a viable alternative system designed to promote economic justice and stability. Grounded in the principles of Sharia, which prohibit interest (riba), excessive uncertainty (gharar), and speculative activities (maysir), Islamic finance emphasizes risk-sharing, asset-backing, and ethical investments tied to the real economy. Through a descriptive-analytical method and a review of recent literature, this study examines the core mechanisms of Islamic finance such as Mudharabah (profit-sharing), Musharakah (joint venture), and Murabaha (cost-plus financing) and their impact on equitable wealth distribution and financial resilience. Recent studies from Indonesia (2021-2024) indicate that Islamic financial institutions have demonstrated greater stability during economic downturns and contribute to more inclusive financial access. The discussion concludes that by prioritizing social welfare and prohibiting exploitative practices, Islamic finance presents a robust framework for achieving sustainable economic justice and systemic stability. Further integration and regulatory harmonization are recommended to enhance its role in the global financial architecture.