Islamic Finance can help in Achieving Equilibrium in Wealth Distribution

Income inequality is one of the most widely discussed topics amongst policy makers and politicians globally. World Economic Forum rated it as one of the top global risks of 2013. The effects of income inequality are far, wide and off course long lasting. It can ruin generations to come and can have a severe impact on the very existence of the society. Further, it has adverse impact on the well being of the economy as well. Policy initiatives by various economies and global organisations like World Bank, United Nations among others have had little or no impact. The roots of inequality rest in the very foundation of the conventional financial system. So if we want to eliminate inequality, an alternative financial system which can help in justifiable redistribution of resources is required. Islamic finance with its deep rooted core values provides an alternative. This paper attempts to understand the key factors responsible for rising income inequality and how Islamic finance can help in the same.