Social And Economic Controls For Islamic Banks' Investments  In Economic Projects

Seraj Moh Ekhlat; Murni Yusoff; Shahir Akram  Hassan

Authors

Seraj Moh Ekhlat PhD Student ; Assistant Professor
Murni Yusoff Senior Lecturer
Shahir Akram Hassan Associate Professor

Keywords:

Investment, Regulations, Economic, Social, Guidelines

Abstract

Islamic banks represent an important source of investment in economic projects that must achieve social solidarity and economic growth in Islamic communities. Islamic jurisprudence has therefore emphasized the establishment of Shariah-compliant regulations for investment, including social and economic guidelines. This study aims to shed light on the nature of investment in Islam, identify its social and economic guidelines, and highlight the importance of adhering to them in supporting economic projects. The study adopted an inductive approach and concluded with a set of results, including, despite the agreement between the Islamic economic system and traditional systems that investment involves the utilization of capital and efforts, the Islamic economic system stands out for its obligation to invest in projects that do not contradict Shariah rules. The benefits extend beyond the investor to serve the interests of Islam and Muslims. The primary objective of the economic and social Shariah guidelines is to achieve social solidarity and economic growth. These guidelines include prohibiting investment in usury (riba), prohibited activities, and monopolies. This paper is a descriptive study that reviews specialised jurisprudential studies and contemporary research on Islamic banking and investment, focusing on investment in economic projects. The aim was to understand project investment's social and economic guidelines. The results emphasized the significant importance of adhering to these guidelines in supporting economic projects by providing comprehensive information, both general and specific, about these projects. They also contribute to making informed decisions regarding the optimal project, as these guidelines represent the definitive Shariah standpoint. The study recommended not stopping at extracting theories without implementing them and suggested directing research towards field studies that examine the extent to which Islamic banks adhere to these guidelines in their investments and establishing regulatory mechanisms to detect deviations and ensure compliance.

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Author Biographies

Seraj Moh Ekhlat , PhD Student ; Assistant Professor

Center for Islamic Development Management Studies, University Sains Malaysia; Sabratha University, Faculty of Economics and Political Science, Sorman, Libya.

Murni Yusoff , Senior Lecturer

Centre for Islamic Development Management Studies, University Sains Malaysia.

Shahir Akram Hassan, Associate Professor

Centre for Islamic Development Management Studies, University Sains Malaysia.

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Al-Hamrouni, Nasser Ahmed, and Suleiman, Mohammed Shaykhoun. (2013). The future of the call to Islamize the banking system in Libya (the idea and the experience of implementation): An evaluative, analytical descriptive jurisprudential study. Master's Thesis, Maulana Malik Ibrahim Islamic University, Malang, Indonesia.

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Farajallah, Ahlam. (2018). Ways and methods of financing small and medium enterprises in the Islamic economy - a case study of the Algerian Al Baraka Bank. PhD thesis published, Algeria.

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