Islam-compliance, beyond Shariah-compliance: Toward a broader socioeconomic transformation

Abstract

With the emergence and growth of the Islamic Finance industry Muslims now have at their disposal comprehensive Shariah-compliant financial services. However, the notion of Shariah-compliance has rarely been deconstructed; essentially, it constitutes a prohibition-driven enterprise. While the avoidance of the forbidden (Haram) is fundamentally important, Islam encompasses a great deal more than the impermissible. Approaching the relevant issues from the perspective of Shariah-compliance, where legal aspects are overemphasized, leads to legalism where the principles, norms and values based on the Qur’an and Sunnah are largely ignored or compromised.

Limiting itself to merely avoid the Haram has significantly handicapped the industry from identifying and endeavoring to synergistically address the broader socio-economic challenges. In this paper, a modified conceptualization based on a more nuanced framework of “Islam-compliance” is proposed and explored, especially from the perspective of value-orientation in Islam. The notion and framework of Islam-compliance has broader implications beyond Islamic finance.

Keywords: Islamic, Islamic finance, Shari‘ah-compliance, Islam-compliance, prohibition-driven, value-orientation.

JEL Classification: P40, Z10, Z12