Exploring the Role of Islamic Finance Contracts and Liquidity Management in Promoting Sustainable Economic Development: Evidence from the UAE

Abstract:
This study examines the role of Islamic finance contracts and liquidity management in promoting sustainable economic development, with a focus on the United Arab Emirates (UAE). Islamic finance, rooted in Sharia principles, offers ethical and risk-sharing financial solutions that align with sustainability goals. Key contracts, including Murabaha, Mudarabah, and Ijarah, contribute to infrastructure development, equitable wealth distribution, and long-term economic growth. However, the practical implementation of these contracts often faces challenges related to liquidity management, which is critical for enabling financial institutions to meet obligations and fund sustainable projects. Using a descriptive-analytical approach, this study investigates how liquidity mediates the relationship between Islamic finance contracts and sustainable development. The findings reveal that effective liquidity management enhances the impact of Islamic finance contracts on sustainability outcomes, highlighting the need for integrated financial strategies and supportive regulatory frameworks. These insights provide actionable recommendations for policymakers and financial institutions to optimize the role of Islamic finance in achieving sustainability goals.