Year
2012
Country
Qatar
Language
English
Abstract
| The main objective of this paper is to assess the present state of the Islamic banking industry in the light of Maqasid Al Sharia and to identify the causes of possible infringements. The paper develops a framework of analysis using Maqasid teachings and applies the latter to the factual realizations of Islamic financial engineering to the field of Islamic financial intermediation. It first shows how Islamic financial engineering helped to develop a large spectrum of products covering most of the functionalities of conventional banking intermediation but then underlines the lack of adherence of such developments to Maqasid. On the ground, the massive use of debt creating modes of financing and the undermining of profit sharing characteristic of profit sharing investment accounts allowed Islamic financial institutions to develop a form of intermediation very akin to conventional market practices but also caused the former to face the very same kind of financial risks of the latter. As a result, distortions aroused through the needed implementation of a series of tricks and artefacts- mainly through an extensive use of promises and off market tawarruq- to develop mitigating techniques against conventional financial risks that inevitably resulted in a severe lack of coherence between principles, objectives and implementation. Ultimately, while assessing Islamic banking realizations in the light of the objectives of Sharia, this paper underlines that the Maqsad of justice, coherence, transparency & clarity, circulation & distribution and balance are very often neglected or even clearly violated by market practice. This being said, it also argues that the latter infringements mainly stem from regulatory and Bovernance frameworks as financial engineering is mainly a response to market conditions that are shaped by regulatory bodies and governments. In this regard, the paper then stresses the need for reform in revisiting regulators' approach toward accommodating Islamic finance through the consideration of Magasid as a policy framework and the enhancement of Sharia governance systems. Practically speaking, the paper advocates the adoption of Maqasid and the tenets of Islamic economics as the foundation of any policy making approach while ensuring coherence between theory and practice along with the promotion of market discipline mechanisms for Sharia Governance. |
English
No. of Pages
129p.
Degree
M.Sc
Select type of work
Institution
CIS Program Old
CIS publications
No
CIS Thesis
Yes
CIS Library Call Number
Thesis QFIS IF 2012/5