Application of Shari'ah contracts in contemporary Islamic finance: a maqasid perspective
This research exposes the underlying maqasid embedded in Shari'ah contracts as applied in Islamic banking and finance. It addresses the problem of not observing maqasid in nominated and combined Shari'ah contracts as well as the problem of not sufficiently imbuing maqasid in products developed by Islamic financial institutions. As a benchmark of the maqasid of wealth, the research adopts Ibn 'Ashur's classification of maqasid to evaluate the conformity of Shari'ah contracts to Maqasid al-Shari'ah namely, justice, circulation, transparency, and firmness. The study focuses on three markets related to the application of Shari'ah contracts, namely, banking, Islamic capital market, and takaful. The study concludes that, by and large, the application of Shari'ah contracts has observed Maqasid al-Shari'ah during its development and initial application stages of Islamic finance products; however, offering such products in the market has raised economic questions as to their viability and economic values. In addition, the malpractice of some Shari'ah contracts has long raised concerns as to the maqasid compliance of such products. The research recommends a de-sophistication of Islamic financial engineering to minimise the possibility of convergence with conventional finance. The research also emphasises product differentiation based on less complicated combined Shari'ah contracts.
Islamic capital market , Islamic finance , Maqasid al-Shari'ah , Shari'ah contracts , Takaful
Soualhi, Y. (2015). Application of Shari'ah contracts in contemporary Islamic finance: a maqasid perspective. Intellectual Discourse, 23 (Special Issue), pp. 333-354.