In the three eras identified in the previous chapters, the evolution of Islamic finance was nothing if not paradoxical. The creation of the first Islamic banks could be seen, especially in the context of the oil crisis and the calls for a New International Economic Order as a challenge to the existing political-economic order. In reality, the first Islamic banks were firmly embedded within the existing Western financial system. By the same token the age of globalization allowed a financial system rooted in the Middle Ages to thrive. Even more striking, amid the Islamophobia generated by the September 11 attacks and the “Global War on Terror,” Islamic finance experienced its most dramatic growth in the first years of the twenty-first century. These paradoxes can be understood only in connection with the evolution of global political economy during those three periods.

The Political and Economic Context of the Birth of Modern Islamic Finance

Modern Islamic banking would probably not exist were it not for two political-economic developments: pan-Islamism and the increase in oil prices. At the center of both was Saudi Arabia's King Faisal. It is thus appropriate that the leading network of Islamic banks be named after him, even though the Faisal Bank is still not allowed to operate as a commercial bank in Saudi Arabia.