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This thesis argues that the Islamic finance industry has its ideological foundations in the business ethics and stakeholder theory since the Islamic jurisprudence supports the ethical foundation of business and financial intermediations. These ethical practices can be traced back to jurisprudential concepts of Maqasid Al Sharia and Maslaha in Islamic law. The current practices of IFI however fails to follow the ethically sound (and in line with the Maqasid and Maslaha ideals) stakeholder model because of competitive pressures from the conventional financial industry and is thus modelled more on the Neo liberal shareholder profit maximisation ideology, focusing mainly on ensuring that the shareholders and certain investments account holders get maximum returns, thereby foregoing the interest of other stakeholders. It is thus argued that due to the incompatibility of the Neo liberal ethos with the Islamic finance ideals (the Maqasid of Financial intermediation), the Islamic finance industry needs to focus on more stakeholder oriented practices. The major reason for the failure of the current regulatory framework for the Islamic finance industry is the lack of any compliance and enforcement mechanism to ensure that uniform sharia governance mechanisms can be applied across the jurisdictions. This it is argued can best be achieved by international principle based Meta regulatory framework focusing on the stakeholder nature of the Islamic finance involving the IFSB and the AAOIFI and giving these bodies the authority to issue certificates of sharia compliance whereby the IFI’s would be required to obtain these certificates to function as ‘Islamic’ institutions. |
