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EVALUATING THE SHARIAH COMPLIANCE AND OPERATIONALISING MAQASID AL SHARIAH: THE CASE FOR ISLAMIC PROJECT FINANCE CONTRACTS

MOQBEL, TAREQ,HESHAM,TAHA (2014) EVALUATING THE SHARIAH COMPLIANCE AND OPERATIONALISING MAQASID AL SHARIAH: THE CASE FOR ISLAMIC PROJECT FINANCE CONTRACTS. Doctoral thesis, Durham University.

Full text not available from this repository.
Author-imposed embargo until 20 November 2022.

Abstract

While the Islamic financial industry has been growing rapidly and has become a significant sector in many countries, it is often criticised of not complying with Shariah (Islamic law) principles and not fulfilling the goals of Islamic law, maqasid al Shariah. Against the positive financial developments of Islamic finance and Islamic project finance (IPF) in particular, it is important to critically examine the underpinning aspects of IPF from the Shariah and maqasid perspectives. Hence, this study aims to explore the contracts used in IPF with the objective of examining their practice in Islamic financial institutions from two dimensions: the Shariah compliance and the adherence to maqasid al Shariah.

Regarding the Shariah component, the study commences with a critical explorative review of the main IPF contracts and their structures. The study then develops two frameworks for Shariah analysis. The first framework relates to compliance with the AAOIFI (2010) Shariah Standards and the second one relates to the overall compliance of the contracts with Islamic commercial law. Four real life contracts, as the case studies, are studied—mudarabah, murabahah, ijarah and istisnaa—and examined against these two Shariah compliance frameworks.

The second component of the research analyses maqasid al Shariah by examining the classical and contemporary discourses and establishes the relationship between Islamic commercial law and maqasid. In addition, the sampled contracts of mudarabah, murabahah, ijarah and istisnaa are deconstructed into their particular rulings and the rulings are linked to their appropriate maqasid through an inductive analysis. Moreover, a framework is developed to examine and quantify the maqasidic compliance. In developing this framework, it was pertinent to assign weights to the maqasid. Therefore, the study first constructed an index—the Maqasid al Shariah Index (MSI)—to measure the relative weights of maqasid in general, and then applied the index to weigh the maqasid of economic activities. The conceptual frameworks developed were then applied to actual IPF contracts to examine their maqasid compliance.

The empirical results show relatively low compliance scores and do not reflect a positive status of Islamic finance when it comes to Shariah compliance and realisation of maqasid. Nevertheless, the study provides useful lessons and information that can be used to evaluate the current practice of IFIs. This initial step is necessary in order to reshape the industry towards the realisation of the social and developmentalist aspects of Islamic economics. More importantly, the study contributes towards the construction of a normative and ethical philosophical basis for the Islamic moral economy.

Item Type:Thesis (Doctoral)
Award:Doctor of Philosophy
Keywords:Islamic Economics, Islamic Finance, Maqasid al Shariah, Shariah Compliance, Project Finance, Islamic Commercial Law
Faculty and Department:Faculty of Social Sciences and Health > Economics, Finance and Business, School of
Thesis Date:2014
Copyright:Copyright of this thesis is held by the author
Deposited On:28 Nov 2014 11:19

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