Citation:
Thesis Type:
PhD dissertationAbstract:
This dissertation develops an analytic framework to explain the emergence of Islamic banking: a "least likely case" of cultural persistence in the technocratic field of finance where the compulsion to standardize practices is most intense. I maintain that the origins and repercussions of Islamic finance cannot be fully understood without recognizing its character as a constructivist project. I then develop this argument by analyzing Islamic banks---their origins; their development in the Gulf States; their negotiation with global finance; and their relationship to political Islamism---through the conceptual lens of strategic constructivism.
Strategic constructivism is the act of making an institution work towards alternative political goals through symbolic action. In situations of hierarchy, creative syncretism enables agents to change the symbolic content of imposed institutions, signaling different political goals and mobilizing society to achieve them. At its most successful, strategic constructivism has the potential to remake politics by shifting the balance of power between groups. Conceptually, it provides a framework for integrating symbolic power into the study of institutions in order to generate a political theory of institutional change.
In the Arab Gulf, the strategic construction of Islamic banks enabled Islamist activists to place capital in the service of Islamic identity, transforming the oil windfall into a politically salient project. My research in Kuwait reveals how Islamic finance works on the symbolic level, empowering new agendas through earmarking, and facilitating Islamist collective action between likeminded organizations and politicians. The interplay of culture and capital is mutually reinforcing, suggesting that the liberalization of Gulf economies may actually hasten the Islamization of Gulf societies.
However, this enterprise is dependent on the acceptance of Islamic finance by state and international regulatory authorities. My research reveals a paradoxical finding: international financial institutions have helped midwife the institutionalization of Islamic financial markets. Indeed, the Islamic banks have used their endorsement to challenge the opposition of their own state authorities to the integration of religious language into financial standards. Equally surprising is the decisive role played by September 11th in overcoming these objections, paving the way for the future growth of the industry.