in: Contemporary Issues in Islamic Law, Economics and Finance: A Multidisciplinary Approach, Flavia Cortelezzi Alessandro Ferrari, Editor, Routledge, London/New York , Turin, pp.13-30, 2022
There is a consensus among economists about the crucial role of financial markets in economic development by allocating savings into investment channels. However, some of the allocation mechanisms of conventional financial markets conflict with Islamic teachings. These conflicts raise dilemmas for true Muslims who want to simultaneously improve their economic status and live in accordance with the teachings of Islam.
Primary sources of Islam have failed to provide definite answers for these dilemma, leading Muslims to turn to Islamic jurists for a more comforting answer. However, their answers were far from uniform. One group of jurists argued that conventional financial instruments are compliant with Islam and allowed Muslims to use them, whereas another group did not. Whereas some were satisfied with the arguments of the first group, followers of the second group have been pleased to see that jurists, in cooperation with financial professionals and lawyers, have developed new financial instruments that are claimed to be compatible with Islamic values. This development was followed by debates regarding the compliance of these new financial instruments with Islam. This chapter presents an overview of these discussions and argues that involvement in an Islamic financial transaction is far from an easy task for an inquisitive Muslim who wants to live a life in harmony with Islamic principles.