The role of Islamic finance engineering in dealing with crisis, the example of covid 19

The increase in crises and the increasing negative economic effects have paved the way for alternatives and solutions to traditional financial systems, which are the main cause of these negative effects. Since such fluctuations are a product of the traditional financial system, the Islamic financial system has proven to be a suitable alternative to slow down the crisis, reduce its impact and restore economic balance. The 2008 crisis seriously affected many economies around the world; It has deeply shaken financial markets, banks and businesses. It has been observed that Islamic financial institutions performed better than some conventional financial institutions during the crisis, leaving a huge impact on investments and the economy in general. After this financial crisis, the demand for Islamic financial services increased and the need to develop and innovate new and more efficient financial instruments emerged. These development and innovation processes are considered part of Islamic financial engineering. This study aims to determine preventive measures that can be taken to prevent financial crises in Islamic finance and reduce their effects. In this context, both the mortgage crisis and the COVID-19 health crisis are being dealt with. A conceptual framework between traditional financial engineering and Islamic financial engineering regarding financial crisis and health crisis is proposed. By explaining the causes of crises and the processes of managing these effects with analytical approaches, the role of Islamic finance in providing solutions to the problems affecting the economy is revealed. The study concludes that Islamic finance can mitigate the effects of crises that threaten the balance of the global economy, thanks to its product diversity based on Islamic sharia principles.