Need to Redefine Islamic Finance in the Light of Maqasid Al-Shariah

M. Kabir Hassan, Aishath Muneeza and Mehmet Saraç
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Mehmet Saraç: Istanbul University

Chapter Chapter 2 in Islamic Finance and Sustainable Development, 2021, pp 11-34 from Springer

Abstract: Abstract The lex loci applicable to Islamic finance is Shariah. Islamic finance has been criticized for focusing only on Shariah compliance since its inception and development in the world and as such, there is a call to redefine Islamic finance in the light of objectives (maqasid) of Shariah. The objective of this chapter is to discuss the ways in which Islamic finance could be redefined in the light of Maqasid Al-Shariah. Using a Maqasid Al-Shariah approach in Islamic finance it is evident that not only the prohibitions such as riba, excessive gharar and maysir shall be eliminated in Islamic finance; but there should be the practice of eliminating all harm that is found in the society and promote good to the society by promoting circulation of wealth in the society in the view of achieving shared economic prosperity which will be obtained via considering the duty of care owed to society and environment. This ought to be the yardstick that should be used in innovating products and services in Islamic finance industry to align with Maqasid Al-Shariah. It is clear from this research there is a gap in implementing Maqasid Al-Shariah in Islamic finance and there is need to formulate a road map to fill this gap. It is recommended in this research that Maqasid Al-Shariah can be adopted in Islamic finance via merging the concepts of SDGs, circular economy, impact investing, ethics and VBI. It is hoped that the findings of this chapter will assist to understand the need to redefine Islamic finance to align with Maqasid Al-Shariah and the practical approach that could be taken in this regard.

Keywords: Ethical finance; Islamic finance; Maqasid Al-Shariah; Sustainable development goals (search for similar items in EconPapers)
Date: 2021
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Persistent link: https://EconPapers.repec.org/RePEc:spr:sprchp:978-3-030-76016-8_2

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DOI: 10.1007/978-3-030-76016-8_2

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