The challenges of realizing maqasid al-shariah in Islamic Banking and Finance

Islam harbors 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 Shari`ah, also known as Maqasid al-Shari`ah. Consequently the doctrine of Islamic economics entered debates over the socialwelfare role of Islam. It has somehow pursued the goal of restructuring economies according to perceived Islamic teachings and principles. Beyond its most visible practical achievement is the establishment of Islamic banks meant to avoid interest and promoted Islamic norms of economic behaviour and ultimately realizing the noble objectives of Shari`ah. This paper examines the challenges of the proper realization of Maqasid al-Shari`ah in Islamic banking and finance. These challenges emerge from different aspects; the proper understanding of Maqasid Al-Shari`ah in Islamic economics; the methods of implementing Maqasid Al-Shari’ah in Islamic banking and finance; the potential conflicts between Macro Maqasid and Micro Maqasid; and the possible abuse of Maqasid al-Shari’ah to justify certain financial contracts which in fact contradicts the Shari’ah texts. The paper analyses all these challenges and provides examples from the current practices of Islamic banks and financial institutions.