Shariah Regulation in Banking and Finance: How Can We Methodologically Deconstruct Them?
About the Research
Islamic Finance is a growing industry, estimated at over US$1.7 trillion and with a healthy growth rate annual growth of 17.6%. All the Islamic finance institutions use shariah regulations for governance of these financial institutions. The shariah regulations are religiously motivated regulations, and their implementation at institutional level provides ontological justification for the religiosity and ethicality of the institution.
The shariah regulations are product of Islamic theory. In current framework of Islamic law, the “morally acceptable content is a precondition of a norm’s legality” (Marmor, 2001), while a law is justified with a reference to its sources. Shariah regulations, therefore come under ‘inclusive legal positivism’, which asserts that “moral principles or substantive values” (Hart et al., 2012:250) are incorporated into the law. The application of shariah regulations within in Islamic finance sits on the justification of its ability to effectively point out the wrongs in the market and the society, and then efficiently prohibit wrongs and subscribe good. In other words, Shariah regulations represent the idea of good within a legal structure.
Shariah regulations are used extensively in Islamic Banking and Finance industry for the CSR, and governance. These regulations are formulated to achieve an agglomeration of ‘good’ within the socio-economic sphere, that is: these collections of regulations are constructed as means to an end and as the end is ‘good’, therefore the assessment of the means (regulations) is ought to be based on the categorical importance of end (good), which they aim to achieve. The agglomeration of good can be taxonomically separated based on the nature of ethical value concept of good, which the regulations aim to achieve.