An Introduction to Islamic Finance: Theory and Practice

(Romina) #1

Introduction 7


The emphasis on the axiomatic principle of Unity forms the basis for the
fundamental belief that Islam recognizes no distinction between the spiri-
tual and the temporal, between the sacred and the profane, or between the
religious and the secular realms. Islam seeks to integrate all human needs,
inclinations, and desires through the all-embracing authority of the Shari’ah.
Life is considered as one and indivisible. Therefore, the rules of the Shari’ah
hold sway over economic life no less than over social, political, and cultural
life; they persuade, determine, and order the whole of life. It is through the
acceptance of and compliance with the rules of the Shari’ah that individu-
als integrate themselves not only into the community, but also into a higher
order of reality and the spiritual center. Violations of these rules will have a
disintegrative effect upon the life of the individual and that of the community.
The Shari’ah rules are derived, based on the Qur’an and its operation-
alization by the Prophet (pbuh), through a rigorous process of investigation
and thinking across time and geographical regions. The expansion of the rules
of Law and their extension to new situations, resulting from the growth and
progress of the Islamic community, is accomplished with the help of consensus
in the community, analogical reasoning—which derives rules by discerning an
analogy between new problems and those existing in the primary sources—and
through the independent human reasoning of those specialized in the Law. As a
result, Shari’ah is invested with great fl exibility in handling problems in diverse
situations, customs, and societies and therefore has a wide range of solutions
and precedents, depending on different circumstances.
History has not recorded instances when Muslim jurists were unable
to provide Islamic solutions to new problems. Their opinions covered all
aspects of life. They laid down brilliant theories, exemplary rules and solu-
tions. Unfortunately, however, with the decline of Islamic rule in Muslim
countries, the signifi cance of the Shari’ah in running day-to-day life also
declined and development of the Shari’ah remained dormant. In the last
few decades, however, the reawakening among Muslims has generated enor-
mous demand for the development of Shari’ah-based rules that address the
problems of modern society.


BASICS OF THE SHARI’AH


The life of a Muslim at the individual and the societal levels is governed
by different sets of rules. The fi rst set, known as aqidah (faith), con-
cerns the core relationship between people and the Creator and deals
with all matters pertaining to a Muslim’s faith and beliefs. The second
set deals with transforming and manifesting the faith and beliefs into
action and daily practices and is formally known as Shari’ah (Law).
Finally, the third set is akhlaq, which cover the behavior, attitude, and
work ethics according to which a Muslim lives in society. Shari’ah
(Continued)
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