A CRITICAL APPRAISAL ON THE CHALLENGES OF REALIZING MAQAêID AL-SHAR¡cAH IN ISLAMIC BANKING AND FINANCE

Islam harbours an economic vision that holds the key to a social order capable of providing social justice along with economic prosperity. This vision is deeply inscribed in the objectives of shar¥cah, also known as maqŒ§id al-shar¥cah. Consequently the doctrine of Islamic economics entered debates over the social-welfare role of Islam. It has somehow pursued the goal of restructuring economies according to perceived Islamic teachings and principles. Its most visible practical achievement is the establishment of Islamic banks meant to avoid interest and promote Islamic norms of economic behaviour and ultimately realizing the noble objectives of shar¥cah. This paper examines the challenges of the proper realization of maqŒ§id al-shar¥cah in Islamic banking and finance. These challenges cover various issues: the proper understanding of maqŒ§id al-shar¥cah in Islamic economics; the methods of implementing maqŒ§id al-shar¥cah in Islamic banking and finance; the potential conflicts between macro maqŒ§id and micro maqŒ§id; and the possible abuse of maqŒ§id al-shar¥cah to justify certain financial contracts which in fact contradict the shar¥cah texts. The paper analyses these challenges and provides examples from the current practices of Islamic banks and financial institutions