Theory and Practice of Modern Islamic Finance

Theory and Practice of Modern Islamic Finance

Islamic Economics and Finance

Theory and Practice of Modern Islamic Finance
The Case Analysis from Australia

Author(s): Abu Umar Faruq Ahmad

Reviewed by: Faizal Ahmad Manjoo

 

Review

This book is an important contribution, particularly for those who wish to know more about modern Islamic finance. It equips the reader with sound Islamic juristic methodologies in order to appreciate the workings of Islamic commercial law and also helps to contextualise the products and regulatory framework for expanding markets such as Australia. The book is also significant when considering the proximity of Australia to countries like Indonesia and Malaysia and its trade with them. The book nonetheless focuses on Australian products and their regulatory challenges. This provides an insight into how to consider the practical side of Islamic finance in a given jurisdiction and, thus, combines theory and practice. The challenges are documented lucidly and can be used as a model for analysing other jurisdictions. The coherence of the eight chapters is commendable. Chapter 2 and 3 highlight the main juristic principles from which Islamic law emanates as without a sound background of the juristic principles it will be difficult to appreciate the technicalities of Islamic finance. Chapter 2 is a generic approach which is found in most books of jurisprudence. The focus is mainly on usul al-fiqh, while chapter 3 deals with various schools of Islamic law. Though the author tries to show that there are many ways of interpreting the Shari[ah, this can also be a source of dispute. This might be confusing for a beginner in Islamic law because the purpose of having a madhhab is in line with the concept of stare decisis. As Zahid Kawthari in his famous book Maqalat al-Kawthari mentions, only about twenty five per cent differences of opinion exist in fiqh. Chapter 3 is also an attempt to deal with the application of the Shari[ah but unfortunately the focus is on the legal maxims which are not a source of the law per se but rather general legal guidelines. However, it is worth noting that the Ottoman’s Mejelle, for commercial law, is a good catalyst for adopting the legal maxims. It seems to me that there is a shortcoming in this chapter in that on the one hand various schools of law are described and they usually apply usul al-fiqh as their principles for deducting law, while legal maxims are being used to show the application of the Shari'ah.


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