International Journal of Islamic and Middle Eastern Finance and

Management
Developing Islamic finance in the framework of maqasid al-Shari'ah : Understanding the
ends (maqasid) and the means (wasa'il)
Mohamad Akram Laldin Hafas Furqani
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Mohamad Akram Laldin Hafas Furqani , (2013)," Developing Islamic finance in the framework of maqasid
al-Shari'ah Understanding the ends (maqasid) and the means (wasa'il) ", International Journal of Islamic
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IMEFM
6,4 Developing Islamic finance
in the framework of maqasid
al-Shariah
278
Understanding the ends (maqasid)
and the means (wasail)
Mohamad Akram Laldin and Hafas Furqani
International Shariah Research Academy for Islamic Finance (ISRA),
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Kuala Lumpur, Malaysia

Abstract
Purpose The paper aims to investigate the dimensions of maqasid al-Shariah in Islamic finance by
exploring the ends (maqasid ) and the means (wasail ). Those would clarify the nature and goals of
Islamic finance as well as its directional development.
Design/methodology/approach Using literature in English and Arabic sources in the area of
maqasid al-Shariah, as well as from the reading of the primary sources (the Quranic texts/nusus), the
paper attempts to delineate the dimensions that would constitute the ends (maqasid ) and the means
(wasail ) in Islamic finance.
Findings The paper explicates three specific ends (maqasid ) in Islamic finance, namely wealth
circulation, fair and transparent financial practices and justice at the micro- and macro-level. To
achieve those ends, the Shariah provides means (wasail ) such as facilitating financial contracts,
establishing values and standards and instituting social responsibility.
Research limitations/implications The paper is a conceptual paper that explores the
dimensions of maqasid al-Shariah in Islamic finance.
Practical implications The findings of this paper will give insights on the ends (maqasid ) and
the means (wasail ) in Islamic finance based on the maqasid al-Shariah discourse. It could be used as a
reference in understanding the nature of Islamic finance and in developing a sound and solid Islamic
finance based on the Shariah.
Originality/value The paper proposes the ends-and-means criteria in Islamic finance, developed
on the basis of the maqasid al-Shariah discourse as well as from direct reading of the texts (nusus),
which is lacking in the Islamic finance literature.
Keywords Ends (maqasid ), Islamic finance, Maqasid al-Shariah, Means (wasail )
Paper type Conceptual paper

International Journal of Islamic and
Middle Eastern Finance and
Management
Vol. 6 No. 4, 2013
pp. 278-289
q Emerald Group Publishing Limited
1753-8394
DOI 10.1108/IMEFM-05-2013-0057
1. Introduction
The development of Islamic finance is widely considered phenomenal. Islamic finance
is not only being used by Muslims but also non-Muslims. While still developing
rapidly in Muslim countries, it is now noticeably penetrating the Western world as
well. Islamic finances emergence as a practical financial system is viewed as timely in
the midst of a world financial crisis for which the remedial solutions have so far been
ineffective, postponing some problems and making others worse. Although the
phenomenon might be seen by some as part of the global Islamic resurgence to
reconstruct Islams legacy in modern times, the interest in its practice is actually
triggered by the philosophy and system of values it offers. The interest in Islamic
 finance is basically pushed by the expectation that Islamic finance could elegantly Developing
offer a coherent perspective for understanding real economic problems as well as a Islamic finance
genuine alternative to the very foundations for the management of economics and
finance to achieve human prosperity.
This expectation is very much in line with the concept of maqasid al-Shariah
(objectives of the Shariah), which provides the philosophical foundations for the
overall direction of Islamic finance, the guidelines for its operations, and its very raison 279
detre in contemporary times. Commerce and finance are viewed as an important part
of the Shariah. Adherence to maqasid al-Shariah is essential for developing Islamic
finance as a system that realizes human wellbeing (maslahah).
Recognition of this reality is driving the increasing interest in applying the maqasid
to the development of Islamic finance. It is generally acknowledged now that meeting
legal requirements through comprehensive and systematic technical procedures is not
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sufficient. Attention should also be paid to the objectives of the Shariah.

This paper attempts to discuss the goals of the Shariah, which signify the
philosophy that underpins an Islamic financial system. The discussion investigates the
meaning and dimensions of maqasid al-Shariah and the means (wasail ) to apply to
realize the goals in real life, especially in Islamic finance.

2. Maqasid al-Shariah: meaning and dimension

Maqasid al-Shariah is translated as the goals and objectives of the Shariah. The word
maqasid is the plural of maqsad, which denotes the straightness of a path
(istiqamat al-tariq), balance and justice (al-adl ), and directive destination (al-itimad )
(Al-Kaylani, 2009, p. 53). Maqasid al-Shariah in this perspective comprises the goals
upon which the Shariah is established and to which all actions of human being are
directed.
Shariah literally denotes a source of water or a path to it. The Shariah constitutes
rulings (ahkam) that encompass all aspects of the belief system (aqidah), the
relationship between individuals and God (ibadah), and relationships between people
(muamalah), as well as a system of ethics and morality (akhlaq). It represents a body of
Islamic teachings that constitute a set of norms, values and laws that govern all aspects
of life (Quran, 42: 13, 21, 45: 18). To reiterate and make explicit what has been implied
above, the aspects of life include political, cultural and civilizational matters that concern
not only the Muslim community but all of humanity (Abdul Rauf, 2002, p. 3; Berghout,
2006, p. 55).
Shariah in this regard is an all-embracing framework that exists to support human
existence by providing the necessary principles and means to establish and enhance
human wellbeing (maslahah). All the Shariahs teachings, injunctions and prohibitions
are related to the grand wisdom (hikmah) of securing human interests in the worldly
life and the hereafter. All the Shariah rules that contain obligations and duties bring
benefit and prosperity, and all its prohibitions prevent them from harm and hardship
(Quran, 2: 30; 3: 191; 6: 165; 38: 27; 44: 38-39; 67: 1-2).
Maqasid al-Shariah therefore comprise all the goals and objectives of the Shariah.
They are standards and criteria, values and guidance rooted in divine revelation (wahy)
to be applied in solving the problems that confront mankind and in guiding the
direction of life. From a more limited perspective, maqasid al-Shariah are the aims or
underlying purposes of the rules of the Shariah.
 IMEFM The discussion of maqasid al-Shariah in Islamic finance should therefore be seen in
this broader perspective. It should not be only about the Islamic objectives in
6,4 legislation related to financial activities; instead, it is related to the whole purpose of
Islam in financial activities.
This understanding of the Shariah has implications for the approach to be taken in
developing Islamic finance and setting its direction. It extends the understanding of
280 Shariah compliance from fulfillment of the legal requirements for financial products in a
mechanical and procedural sense to include commitment to values and goals outlined by
the Islamic vision of life. Furthermore, in deriving legal rulings, comprehension of the
overall objectives of the Shariah provides a theoretical framework by which particular
texts and technical procedures are understood. The understanding of maqasid prior to
laying down guidelines or setting up practical rules is important in order to get correct
output from the ijtihad process (Al-Qaradawi, 2007, p. 137).
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In practice, such a process would lead us to a balanced approach in deriving laws

from the texts (nusus) and produce a moderate and just result (Quran, 55: 8-9). Moreover,
it avoids two extremes: the extreme literal approach, which ignores and thwarts the
maqasid at the expense of rigid textual understanding, and the extreme liberal approach,
which ignores and thwarts the maqasid by loosely interpreting the texts using unbridled
intellectual reasoning.
Therefore, maqasid opens up the avenues of ijtihad in tandem with the technical
procedures of usul al-fiqh for deriving laws to make sure that the spirit of the law is reflected
in the practical legal rulings (Kamali, 2000, p. 22). In this approach, the understanding of
texts should be done in relation to the context of practical realities. This would create unity
in deriving Shariah rulings in which the detailed rules are to be read within the parameters
of the general framework and detailed actions are set in line with the bigger goals.
Discussion of maqasid would ensure applicability of Shariah principles and objectives
to all situations and ensure suitability of human circumstances in all places and times with
the grand framework of the Shariah. Aspects of this process have been identified in the
literature as taqrir al-maslahah (confirming benefits), sadd al-dhariah (blocking lawful
means that lead to harmful results), raf al-harj (removing hardship), and repelling harm
(daf al-mafsadah) or changing it (taghyiruhaa) (El-Mesawi, 2006, p. 92).
This should be done continuously until we arrive at the result Al-Jawziyyah (1991,
pp. 3 and 14-15) mentions in Ilam al-muwaqqiin:
The Shariah edifice and foundations [embody] wisdom and benefits for humanity in their
worldly life and afterlife. All of it is justice, all of it is benefits, and all of it is wisdom. Any
issue [in which the ruling] departs from justice to injustice, from mercy to its opposite, from
benefit to harm, and from wisdom to arbitrariness is not, in fact, part of the Shariah, even if it
has been attributed to it by a process of interpretation.

3. The ends (maqasid ) in Islamic finance

As the Shariah is designed on the basis of, and for the purpose of, human wellbeing
(i.e. maslahah), maqasid al-Shariah take into consideration the various dimensions of
human needs. Their fulfillment will create balanced satisfaction in human life at the
micro-level of individuals and the macro-level of societies and thus help realize human
well-being. With regard to Islamic finance in particular, maqasid al-Shariah refer to
the overall goals and meanings that the Shariah aims to achieve from its principles
and rulings related to financial activities and transactions (Laldin, 2008, p. 77).
 The literature on maqasid al-Shariah in Islamic finance classifies the issue as falling Developing
under the rubric of protection of wealth (hifz al-mal ) as per al-Ghazalis classification of Islamic finance
types of maslahah (Al-Khelaifi, 2004; Laldin, 2010; Dusuki and Bouheraoua, 2011;
Ahmed, 2011)[1]. That approach is justified as finances subject matter is basically how
to allocate resources from surplus sectors (capital providers) to deficit sectors (capital
users) so that wealth is smoothly circulated and human welfare is realized. As finance
deals with wealth allocation and appropriation (from mobilization until utilization), the 281
maqasid in hifz al-mal should therefore be understood and discussed by looking at the
nature, function and role of wealth in relation to the primary objective of realizing human
wellbeing, individually and collectively, by acquiring benefit (maslahah) and preventing
harm (mafsadah) (Quran, 5: 6).
Reflecting upon a range of texts of the Quran and the Sunnah on financial
activities, it can be stated that the Shariah has given consideration to specific
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objectives in the enactment of financial laws and principles. The overall goal of these
objectives which include facilitating the circulation of wealth in the society,
advocating fair and transparent financial practices and promoting socio-economic
justice is to serve the financial needs of human beings.

3.1 Wealth circulation

Wealth circulation includes all the processes related to wealth creation, consumption
and distribution. This objective is derived from the Quranic explanation of the reason
behind a rule regarding distribution: [. . .] so that wealth is not circulated among the rich
in the society only (Quran, 59: 7). Islam intends that resources run smoothly
throughout the economy in the pursuit of human well-being and intergenerational
continuity.
This perspective embarks from the concept that wealth is considered as a bounty
from God ( fadl Allah) and a trust (amanah) which He temporarily entrusts people with.
As Gods bounty, wealth itself reflects Gods blessings on humanity (Quran, 62: 10)
and it is therefore naturally good (khayr) (Quran, 2: 215, 272-3). Working to acquire
wealth is therefore not only legitimated but highly praised (Quran, 4: 32); however,
creating and augmenting wealth must be done using only the broad range of legitimate
means (Quran, 4: 29). Since wealth is Gods trust (amanah), it is to be spent in the right
ends (Quran, 3: 92). The most favoured ends are those that conform to the higher
objectives associated with the human mission of stewardship (khilafah) (Quran, 23:
51).
Commercial and financial activities are viewed positively as mechanisms to
circulate wealth among all the sections of society and all sectors of economy so that it is
not concentrated in the hands of the few but, rather, promotes overall human
wellbeing. Islam encourages wealth to be employed in productive activities. Funds
should not be wasted (Quran, 6: 141; 25: 67), left idle (Quran, 9: 34) or misused and
managed unprofessionally (Quran, 4: 5). In fact, any funds which are not employed
will be penalized through zakat, which will gradually reduce the volume of idle
wealth and put it back into circulation. Zakat is an institutional mechanism that
necessarily keeps wealth in continuous circulation.
The Islamic economic system as a general framework would ensure fair and
equitable mobilization and distribution of resources. Islamic finance in particular has
developed in line with Islams objective of wealth circulation by observing Islamic
 IMEFM rules (ahkam shariyyah), which identify right and wrong behaviour in the spirit of
6,4 protecting wealth (hifz al-mal ). Islamic finance institutions, including Islamic banks,
takaful companies, mutual funds and other companies, play a role in resource
circulation in society and increasing human wellbeing.

3.2 Fair and transparent financial practices

282 Permissibility (ibahah) is the overarching principle governing commercial and
financial transactions. This ibahah principle is aimed to facilitate the realization of
maslahah and to remove hardship and harm in financial transactions. Freedom of
contract is therefore not only recognized as part of the system but is also guaranteed
and treated as an essential element of any valid contract. Nevertheless, this freedom is
to be exercised within the atmosphere of fairness, equity, justice and high morality.
Any contract stipulated and agreed by both parties should be respected and enforced
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(Quran, 5: 1) as long as it involves no terms clearly prohibited by the Shariah.

Transparency means that all financial transactions must be conducted in such a
manner that all the parties are clear about all important facts of the transactions
necessary for the avoidance of disputes, clashes or damages to any party. The Quran
has stressed that all agreements and contracts should be as transparent and clear as
possible (Quran, 2: 282, 11:84, 17:35, 26:181-182, 55:9, 83: 1-3).
Fairness means equity and honesty between the transacting parties as well as
efficiency in transactions. Fraud, deception and manipulation of any kind are therefore
condemned. Islams insistence on the mutual consent of the parties as a condition for
the validity of any contract means that pressure, fraud, or misleading statements by
any party render it invalid or voidable. Likewise, Islam disapproves all commercial
practices which involve explicit or implicit harm and injustice to the contracting
parties or to the public at large and which restrict the freedom of trade or stand in
violation of the Quranic injunctions or approved business conduct (Balala, 2011, p. 6).
In addition, this objective also seeks to rid Islamic finance of misuse and
squandering of resources, to prevent disputes and grudges among the community, and
prevent one party gaining from anothers loss. Kamali (2008, p. 22), in this regard,
firmly notes that justice and fairness are the hallmark values in commercial contracts.
If a contract proves to be an instrument of injustice, it must be set aside, and justice,
which is the goal) of the Lawgiver, must be given priority over considerations of
conformity to an untenable contract.

3.3 Justice in the macro- and micro-dimensions

The maqsad of wealth circulation is related to the macro-goal of the Shariah while the
maqsad of fair and transparent financial practices is related to the micro-goal of the
Shariah in transactional instruments and mechanisms. The maqsad of justice embraces
both the micro- and macro-dimensions. This maqsad is related to the desire of having a
just social order as well as just dealings among individuals in financial transactions.
This objective is characterized in the Quran with the concepts of right, fairness,
putting things in their proper place, equality, harmony, balance, and moderation.
It includes the rights (huquq) to equal opportunity, to not be exploited and to receive true
valuation of ones labor. This objective underlies the substantive and regulative rules of
the Shariah, the formation of communities and individual behavior (Iqbal and
Mirakhor, 2007).
 At the macro-level, the goal is to realize social justice. The Islamic financial system Developing
attempts to realize economic justice through wealth circulation, efficiency in Islamic finance
resource utilization, fulfilling societys basic needs, elimination of poverty and
improving human wellbeing. The main purpose of resource circulation (distribution)
is to achieve justice, maximum efficiency and improvement of human wellbeing in
general.
At the micro-level, the principle of justice embraces individual dealings. Economic 283
transactions demand equal rights and opportunities and are not allowed to be enforced
without the mutual consent of both parties (taradi ). Likewise, unfair dealings or
unjustified actions that lead to economic injustice or exploitation are condemned, for
example: bribery (rashwah), fraud (ghish), cheating (tadlis), uncertainty and lack of
clarity (gharar) and unjustified increase in wealth (riba).
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4. The means (wasail ) in Islamic finance

As the objective of the Shariah is nothing other than human wellbeing, it provides the
necessary means (wasail ) to establish and preserve it in the real-world human context.
Based on our previous discussion on the nature of maqasid, which aim at establishing
maslahah and preventing or removing mafsadah, wasail can be classified, in
accordance with the nature of the maqasid they serve, into those that realize maslahah
(in this case promoting the circulation of wealth, fair and transparent financial dealings
and justice) and those that prevent mafsadah (i.e. factors that prevent wealth from
smooth circulation, lead to unfair financial dealings or thwart justice).
There are important differences between maqasid and wasail in certain aspects.
While principles and objectives (maqasid ) are fixed, established and permanent, means
(wasail ) are subject to change as they must be tailored to effectively realize those fixed
goals in the context of ever-changing circumstances. Creativity is required to find or
create the appropriate wasail for that end. The following discussion will try to
investigate some of these directives and mechanisms.

4.1 Facilitating financial contracts

To institute the smooth circulation of wealth in society, the Shariah facilitates various
types of transactions and strongly encourages Muslims to undertake and participate in
necessary types of financial activities (Laldin, 2008). In commercial activities, the
underlying principle is that of permissibility (ibahah). The transactions validated in the
Quran and Sunnah are not exhaustive, and new transactions can be introduced as
long as they are not contradictory to the principles of the Shariah. Therefore, freedom
of contract is guaranteed so long it does not annihilate fairness as propagated by the
maqasid al-Shariah (Kamali, 2000, pp. 69-70).
In general, Islamic nominate contracts related to economic transactions are classified
into three main categories: exchange (muawadat), partnership (ishtirak), and gratuitous
(tabarruat). Exchange contracts include simple spot sales (buyu); sales that create debt,
such as deferred payment sales, salam, istisna, ijarah, and reward for successful
completion of a job ( jualah). Ishtirak contracts are ones in which one party assigns
work/capital/obligation to another party (or parties). These contracts include agency
(wakalah), partnerships (sharikah) contracts in the forms of mudarabah and
musharakah, assignment (hawalah), and pledge or mortgage (rahn). In gratuitous
contracts, ownership or possession (right of use) is transferred without consideration or
 IMEFM compensation. Gratuitous contracts include loans (ariyah and qard ), deposits (wadiah),
6,4 gifts (hibah) and guarantee/security (daman or kafalah).
The contracts are designed to serve their particular purposes. Therefore, each
contract should be respected and fulfilled not only in order to protect the interests of
the parties to it, but also to serve the purpose for which the contract was legislated
(Quran, 5: 1).
284 If a contract is irregular due to some of its conditions (shurut), it would have to be
fixed. If it is defective in its pillars (arkan), it would be considered void (batil ) and is
irreparable. Dissolution (inhilal ) of a contract after it has become valid (sahih) and
enforceable (nafidh), but before or during its execution, is possible through:
.
mutual agreement (iqalah); or
.
revocation and termination due to special reasons ( faskh) such as impossibility
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(istihalah) of contractual performance or automatic dissolution by death,

destruction of the subject matter, expiry of the period, achievement of purpose,
etc. (Islam, 1998, p. 339).

This is because the Shariah firmly stands for cooperation and fair treatment among
the contractual parties. Therefore, it does not allow a loophole to exist so that unfair or
unjust treatment could happen.
This spirit marks the Islamic approach in commercial (financial) dealings as not
only formal but also substantial. While certain formalities and substantive elements are
essential for a transaction to become legally binding on the parties, this should be done
through mutual agreement that brings about mutual consent and satisfaction (rida)
(Quran, 2:282). Therefore, along with approval of various contractual facilities and
emphasising fulfilment of contractual obligations, Islamic law also provides various
ways to remove contractual obligation in situations of unavoidable difficulties and
necessities.

4.2 Establishing values and standards

Transparent and fair dealings are considered among the main objectives of the Shariah
in financial transactions and activities. In this regard, it aims at creating an equal and
fair transactional atmosphere and at protecting the parties against exploitation or
imbalance between their reciprocal rights and obligations. Such imbalances tend to
result from a lack of fair and objective criteria by which their rights and obligations can
be determined with an acceptable degree of exactitude and certainty (Omar, 1998, p. 44).
The application of the Shariah in the financial and commercial sphere should
therefore not result in injury, harm or difficulties to either individuals or the public at
large as the Shariah intends to create a positive atmosphere in commercial
transactions whereby exchanges are done on the basis of brotherhood, cooperation and
mutual benefit to both parties. Therefore, the Shariah has identified certain values,
measures and standards to be upheld in transactions and certain negative elements to
be avoided, as they would nullify the objective. Those values and standards would
relate to both the macro-maqasid dimension of having wealth circulate smoothly in
society and the micro-maqasid aspect of having fair and transparent financial dealings.
Economic exchange in Islam is inseparable from Islamic values, which must be
translated into practical rulings that prevent fasad (corrupt acts) such as unfair
dealing, abusiveness, greed, unbridled individualism and exploitation of others. At the
 same time, truth and honesty, responsibility, trust, generosity, justice, friendship and Developing
cooperation are highly encouraged and must be preserved in financial dealings.
These values would not only protect customers, stakeholders and the public, they
Islamic finance
would also promote smooth allocation of resources and fair dealings in transactions.
According to Abtani (2007):
Islamic law cannot be separated from its moral, ethical and religious principles; otherwise, its
rules will be useless. In other words, the Islamic system cannot be secular. This is because all 285
Islamic rules, including economic and political, are connected with the faith, beliefs and
worship of Islam.
Beyond the realm of values, the Islamic economic system has instituted various ways
to spend for the sake of Allah such as zakah, infaq, sadaqah, hibah and qard. These
would cultivate the spirit of brotherhood and mutual cooperation in society, assist the
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circulation of wealth, activate the economy and increase productivity. Conversely,

destructive tendencies have been prohibited, for example, israf (unnecessary
spending), itraf (self-indulgence), tabdhir (spending on unlawful activities), and bukhl
(stinginess). Ihtikar (hoarding) is also prohibited as it prevents wealth from circulation
by halting supplies. Likewise, illegal means of acquiring wealth or causing harm to
others in wealth creation are also prohibited (Quran, 5:33, 38).
From the micro-perspective of transactions, in the effort to achieve justice, Islam
puts in place measures to level the playing field among the parties to a contract. That
includes the removal of factors that would distort equality or allow one party to gain at
the expense of others. Among the main negative elements are riba and gharar.
Riba is banned because it allows unjustified increase in wealth in transactions,
whether in loans (qurud ) or sales (buyu) (Quran, 2: 275-277). An essential feature of riba
is that it transfers risk onto one party and shields the other from it, guaranteeing it a
fixed return. In a loan, riba transfers risk to the debtor, by requiring him to pay back the
money lent with increment. Certain sales, especially those involving delayed payment,
can also be structured to transfer all risk to the buyer without the seller assuming risk
(ghurm) or liability (daman) or effort (kasb). Riba could also arise due to unequal
exchange in a sale.
Riba is very much related to injustice. It is prohibited not simply with regard to
interest on loans or banking interest. Instead, it is a comprehensive concept which
encompasses all factors of production and distribution, such as capital, land and labor
whereby one party attempts to gain benefit at the expense of the other party without
providing an equal counter value (iwad ) (Abu Sulayman, 1998, p. 99). Riba is forbidden
on the ground that it fosters the unjust acquisition of wealth at the expense of social
justice, the equitable distribution of wealth and the wellbeing of the community
(Choudhury, 2012). The abolition of riba also implies that Islam promotes cooperative
and participatory financing for resource mobilization and circulation in society as means
to general productivity and wellbeing.
Gharar is also prohibited and is considered a major negative element that would
prevent a fair financial transaction. Gharar is defined as a characteristic that renders
the consequences and future outcome of a transaction unknown or uncertain (majhul ).
It is a transaction done on the basis of pure speculation in a state of ignorance ( jahalah)
due to uncertainty about the existence of the contracts subject matter or failure to
properly identify it, e.g. its genus, type or quantity, or uncertainty about the ability to
deliver it, time of delivery, time of payment, etc. Transactions containing gharar
 IMEFM usually lead to dissatisfaction on the part of the parties involved and cause harm
6,4 and/or conflicts between them due to the attendant ambiguity.
In the maqasidic approach, law and ethics, values and practices, form and substance
should integrate and not contradict one another. Shariah prohibitions and parameters
should not, therefore, be understood in a merely legalistic or formalistic manner.
Instead, attention should be focused on the core and substance of values and principles.
286 In banking and finance activities, for example, the Shariah injunctions should be
integrated in the operational activities with genuine concern for fair and transparent
practices that contribute to the development of society and human wellbeing (Dusuki
and Abozaid, 2007, p. 161).

4.3 Instituting social responsibility

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In the spirit of social justice, Islam balances individuals rights with their duties and
responsibilities towards others. The concept of fard kifayah (social obligation) places
responsibility on those who are capable or better off to assist those who are not capable
or who are worse off. As it is an obligation ( fard ), social responsibility is therefore not
an option. This framework of mutual cooperation and assistance should become the
social context of an Islamic economy, whereby society will grow without disparity,
indifference or exploitation (Rahman, 1969, p. 1).
As wealth is a trust, the Quran indicates that a person may consume according to
his need. The rest of income or wealth should be spent in charity or the cause of Allah
( fi sabilillah), or be reinvested in a business where it may produce more wealth and
contribute to employment and income for others. Zakah and sadaqah are formal
institutions of social responsibility instituted by Islam that ought to bring society close
to the ideal of distributive justice (Al-Faruqi, 1983, p. 221).
While it is preferred that this responsibility be undertaken from moral
consciousness that it is right to take care of and assist fellow human beings, an
Islamic economy is also realistic in acknowledging the responsibility of the state. It is a
factual reality that people, left to themselves and to market forces, would most likely
not reach the desired goals and objectives spelled out above due to weaknesses in
individuals (Quran, 96:6). Some other mechanisms are therefore needed. This calls for
state involvement by setting up regulations, laws and policies, as well as institutions of
civil society to help, along with government, to provide a social safety net for the
disadvantaged. The constraints imposed, and incentives offered, by the norms, values
and culture adopted in a society are also important.
The emergence of Islamic finance should be viewed in this context. Islamic finance is
a part of Islamic economics that has the potential to contribute richly to the achievement
of the major socioeconomic goals of Islam such as socioeconomic justice and equitable
distribution of income and wealth (Chapra, 1985, p. 34). The establishment of Islamic
banking and financial institutions is not an attempt to merely fulfil Muslim societys
desire to have a legal (halal ) form of financial services in a strict legalistic (formalistic)
sense by cleansing economic and financial practices from interest (riba), gambling
(maysir), uncertainty (gharar) and other prohibited (haram) elements commonly found
in conventional financial services. Muslim society has a right to expect a high level of
corporate social responsibility from Islamic financial institutions since they carry the
Islamic name, which implies that they should promote Islamic ideals and objectives in
human life (Dusuki and Abdullah, 2007; Sairaly, 2011).
 Islamic banks and financial institutions should take maqasid into account in setting Developing
their corporate objectives and policies and also use them to verify compliance with true Islamic finance
Islamic principles; Islamic finances progress will be monitored by how well it realizes
the maqasid in producing a good economy marked by the spirit of brotherhood
(ukhuwwah) and cooperation (taawun), social equality and justice (adalah), just
and fair allocation of resources, elimination of poverty, protection of the environment
and achievement of general wellbeing (maslahah). 287
5. Conclusion
Maqasid al-Shariah is a comprehensive concept that explicates the ideals/objectives of
the Shariah related to human life. As the Shariah is an all-embracing concept that is
concerned with human life and human wellbeing, maqasid should not be reduced to
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objectives in the legal dimension. The maqasid discussion in the financial sphere
should always refer to the general objective of the Shariah, which provides a grand
framework and direction for how financial transactions should be arranged in an
Islamic economic system. Our perspective should not be limited to fulfilling the
minimum legal requirements and calling that Shariah compliant.
In the framework of maqasid, Islamic finance and banking activities lead to the
actualization of Shariah objectives by realizing maslahah (benefit) and preventing or
repelling mafsadah (harm). In this endeavour, the discussion would embrace the micro-
and macro-dimensions of individuals and society in general. The maqasid (objectives)
would include smooth circulation of wealth, fair and transparent financial practices,
and justice and equity at both the micro- and macro-levels. In order to realize those
objectives, the means instituted by the Shariah include facilitating financial contracts,
establishing values and standards as well as inculcating a sense of social
responsibility. The future trend in the development of Islamic banking and finance
is the expectation that it adopt maqasid al-Shariah as the indispensable framework for
structuring Islamic financial contracts and as the directional guideline for further
development of the industry. Fulfilling minimal Shariah legal compliance in product
structuring is viewed as insufficient. Instead, movement towards realizing maqasid
al-Shariah is highly valued as the means to give Islamic banking and finance a
meaningful presence. This would have an impact of economic substance in the form of
just and fair allocation of resources, real economic sector development, and fair and
transparent financial dealings with all the ethical hallmarks of brotherhood,
cooperation and risk sharing.

Note
1. Al-Ghazali (1993, Vol. 1, p. 287), in his book al-Mustasfa, classified maqasid al-Shariah as
protection of five essentials: the religion (al-din), life (al-nafs), intellect (al-aql ), progeny
(al-nasl ) and property (al-mal ). Since then, scholarly discussion of the theory of maqasid
al-Shariah has explained, broadened and applied this framework in practical life.

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Sharif, M. (2005), The feasibility of an Islamic economic system in a modern world, in

Ahmad, M.B., Ahsani, S.A. and Siddiqui, D.A. (Eds), Muslim Contributions to World
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About the authors

Dr Mohamad Akram Laldin is an Associate Professor and is currently the Executive Director of
International Shariah Research Academy for Islamic Finance (ISRA). Prior to joining ISRA he
was an Assistant Professor at the Kulliyah of Islamic Revealed Knowledge and Human Sciences,
International Islamic University Malaysia (IIUM). He is a member of Bank Negara Malaysias
Shariah Advisory Council and member of HSBC Amanah Global Shariah Advisory Board.
Akram holds a BA honours degree in Islamic Jurisprudence and Legislation from the University
of Jordan and a PhD in principles of Islamic jurisprudence (usul al-fiqh) from the University of
Edinburgh, Scotland, UK. He is a prolific author of academic work, specifically in the areas of
Islamic banking and finance. He has published books Fundamentals and Practices in Islamic
Finance (2008), Introduction to Shariah and Islamic Jurisprudence (2011, 3rd ed.), and A Mini
Guide to Shariah and Legal Maxims (2010).
Dr Hafas Furqani is currently a Researcher at International Shariah Research Academy
for Islamic Finance (ISRA). He received PhD of economics (2012) as well as Master of economics
(2006) from the Department of Economics, International Islamic University Malaysia. His
Bachelor degree is in Shariah Muamalah from the State Islamic University Syarif Hidayatullah
Jakarta (2002). Hafas has extensively written and published articles in the areas of Islamic
economics, banking and finance in academic journals as well as newspapers and magazines.
His paper Challenges in the Construction of Islamic Economics Discipline has awarded 1st
prize winner at KLIFF Essay Competition (2011). His PhD thesis The foundations of Islamic
economics: a philosophical exploration of the discipline has been awarded Gold Medal at the
2012 International Islamic University Malaysia Research, Invention and Innovation
Exhibition (IRIIE 2012). Hafas Furqani is the corresponding author and can be contacted at:
hafas@isra.my

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