Maqasid al-Sharia
Maqasid al-Sharia are the objectives or purposes of Islamic law — classically, the protection of religion, life, intellect, lineage and property. In finance they are invoked to ask whether a product serves those aims, not just whether its contracts are technically valid.
Also called: maqasid · maqasid al-shariah · objectives of Sharia · higher objectives of Islamic law
The framework was developed by classical jurists, notably al-Ghazali and al-Shatibi, as a way of reasoning about the purposes behind specific rules. Protection of property and wealth (hifz al-mal) is the objective most directly engaged by finance, but the others, such as protecting life and intellect, bear on what may be financed.
In modern Islamic finance the maqasid are the vocabulary of its internal critics. Products such as tawarruq and bay' al-'inah may pass a contract-by-contract review and still be criticised for reproducing the economics of interest-bearing debt. Proponents of a maqasid-based approach argue for more risk-sharing, social finance and real-economy investment.
In practice
The maqasid are a framework for reasoning, not a checklist that approves or rejects products. Appeals to them are used both to tighten standards and, by some, to justify relaxing specific rules — which is why they are contested.
See also
- ShariaSharia is the broad body of Islamic norms and law derived from the Qur'an and the Sunnah; in finance it supplies the principles that jurists turn into concrete rules for contracts, ownership, debt and exchange.
- Fiqh al-Mu'amalatFiqh al-mu'amalat is the branch of Islamic jurisprudence that governs transactions between people: sales, leases, partnerships, loans, agency, guarantees, property and the other contracts on which Islamic finance is built.
- TawarruqTawarruq is a structure in which a person buys an asset on deferred payment terms and immediately sells it to a third party for cash, ending up with cash now and a debt payable later. It is widely used and heavily debated.
- Bay' al-'InahBay' al-'inah is a sale and buy-back: a person sells an asset on deferred payment terms and immediately buys it back from the same buyer for a lower cash price, leaving the buyer with cash now and a larger debt later.