Prophetic Finance And Economics By Mufti Faraz Adam

Prophetic Economics

• Positive screening in Islamic Finance seeks investments that align with Prophetic practices, offering returns beyond financial gain.
• The Sharīʿah-Powered Framework, inspired by the Sunnah, includes criteria such as sustainability, social enterprise, and responsible consumption.
• Technological advancements, particularly Web3 technologies, are expected to significantly influence the future of Islamic Finance.
• Tokenisation is highlighted as a transformative aspect of Web3, enabling fractional ownership and increasing liquidity.

Principles of Islamic Finance

• The essence of Islamic Finance is to align with Sharīʿah principles while addressing modern economic challenges.
• The framework promotes holistic societal well-being through ethical investment practices.
• The focus on social enterprise encourages strategies that balance profitability with social impact.
• Emphasis is placed on zero debt, uplifting emerging markets, and energy conservation.

Prophetic Guidance in Finance

• The Prophet Muhammad ﷺ emphasized fair labor practices, equitable wages, and safe working conditions.
• Ethical financial transactions are rooted in honesty and full disclosure, as highlighted in various Ḥadīth.
• The Islamic economic system envisions a free market that balances economic freedom with ethical constraints.

The Role of Ḥiyal in Islamic Finance

• Ḥiyal refers to legal mechanisms that seek to achieve permissible objectives without violating Sharīʿah.
• The application of Ḥiyal must adhere to ethical principles and avoid harm, deceit, and violation of rights.
• Classical scholars have discussed various forms of Ḥiyal, emphasizing their role in addressing contemporary financial challenges.

Challenges and Opportunities in Islamic Finance

• The Islamic Finance industry faces challenges such as consumer confusion and a lack of understanding of its principles.
• There is a need for greater communication and collaboration among stakeholders to enhance the industry’s growth.
• The industry must embrace a culture of continuous improvement and iterative development to adapt to changing economic landscapes.

Conclusion: The Future of Islamic Finance

• The integration of Prophetic teachings into Islamic Finance can lead to a more ethical, equitable, and sustainable financial system.
• The Sharīʿah-Powered Framework aims to operationalize the essence of Prophetic guidance in financial practices.
• Emphasizing the importance of ethical conduct and integrity will foster a climate of mutual respect and understanding within the industry.