The role of fiqh in Islamic finance

Islamic law is the most flexible and heavenly revealed law when compared with the other revealed laws in their original versions, as the Quran tells us. Thanks to this flexibility, Islamic law, or Fiqh, can accommodate many market needs. Elements of the flexibility of Islamic financial law include: permissibility being the original rule in Shariah; Shariah rules not being all fixed or permanent, for they include the Mutaghiyyrat (changeable) elements; and prohibition not being of the same degree in Shariah. Equipped with a flexible basis for legislation, the Faqih is provided with general guidelines that help him reach sound and acceptable rulings. These guidelines teach the Faqih to observe the following while judging or developing a transaction: the structure of the transaction; the essence of the transaction; the general as well as the particular Shariah objectives of the transaction; and the implication of implementing the transaction. Shariah also teaches the Faqih to prioritize these requirements when compromising some is necessary. Wellestablished Shariah concepts, however—like Shariah policy, public interest, and necessity—have been used in the modern Fiqh, especially in Islamic finance, to reprioritize these requirements and sacrifice some. Although these concepts are Shariah concepts and some are originally valid instruments in Ijtihad Fiqhi, applying them in the context of Islamic finance has raised major Shariah concerns. The following discussion touches on some of the proper Fiqh instruments for Islamic finance, and then it elaborates on the instruments effectively in use and their Shariah concerns.