Book Review

The Informal Economy and Islamic Finance: The Case of Organisation of Islamic Cooperation Countries


There are several solicitudes regarding the development and existence of the shadow economy, but three stand out. For starters, the operations of the shadow economy are hidden from official records, resulting in a tax loss for the government. Second, the emergence of the shadow economy indicates an erroneous connection between the government and the population. Shadow economies arise when people are dissatisfied with the government’s services regarding their tax payments. The result is that losing tax revenue causes the government to encounter challenges when it comes to funding projects and development expenditures. Finally, if only official data and facts are considered, the picture of social and economic status and the entire economy will be unreliable. Due to this, workers in the shadow economy are officially classified as jobless, despite
receiving compensation. This circumstance necessitates expansionary macroeconomic measures as well as additional social benefits and security expenditures (Frey & Schneider, 2000). Shadow economies have received considerable attention in developed and developing countries in recent decades, however, little research has been conducted on developing economies, particularly in Organisation of Islamic Cooperation (OIC) member countries. In attempting to fill the literature gap, this book makes a significant contribution.