On the Ethicality of Islamic Banks’ Business Model

This paper scrutinizes the ethicality of Islamic banks’ (IBs’) business model by employing ‘objectives law’ (Maq?sid al-Shar?’ah). necessitates developing an ethical framework to construe two primary injunctions finance, namely rib? and gharar. The former embodies financial decoupling (aggravating risk-shifting) unjust price gouging (provoking economic stagnation exclusion), while latter involves asymmetric information excessive risk-taking behaviour (exacerbating fragility thus systemic risk). We empirically theoretically illustrate that these unethical issues are still prevalent in IBs’ modes financing, despite Shar?’ah-compliant endorsement religious scholars (i.e. Shar?’ah supervisory boards). affirms is merely impression management exercise IBs instead their true identity. way forward conceptualize financing beyond just compliance scrutinizing impact on society at large. would require updating centuries-old rulings (Fat?w?) transactions consulting finance academics practitioners.