This book attempts to address the question: “From an Islamic perspective, what are the main objectives of ‘Islamic Finance’ in relation to the individual, society, state, and global economy?” It begins with a discussion of what it means, from a methodological perspective, to adopt a purposive approach (maqasidi) to understanding Islamic law (Sharia). It then proceeds to discuss the meaning of the purposive approach to finance grounded in the norms of Islamic Sharia.
The analysis begins by identifying the extent to which the explicit textual sources of the Sharia broadly recognize the legitimacy of finance, and identifies the different kinds of finance that the Sharia explicitly recognizes, including, a for-profit financial sector and a charitable (or not-for-profit financial sector) and public finance. The author then provides a substantive analysis of each sector, arguing that each sector is governed by its own particular purposes (maqasid), and that it would be inappropriate to import the concerns of one sector, emphasizing that all sectors are united by a meta-Islamic ethic of a commitment to efficiency, or from an operational perspective, an anti-waste principle.
Besides, the author discusses specific problems related to contemporary Islamic finance including the failure of Islamic banks to guarantee the money of depositors by virtue of their use of the two-tiered mudaraba structure to finance their dealings; the difficulties raised by the current approach of Islamic equity indices, such as the Dow Jones Islamic Index; how to transform zakat into an effective tool for distributive justice due by overcoming the historical legacy of legal formalism in the jurisprudence of zakat; and, the role of general taxation in public finance in Islam and the achievement of social justice. The book concludes with a presentation of the latest updates in the theory and practice of Islamic finance across the various dimensions discussed in this book.
