The Foundations of Islamic Banking

The Foundations of Islamic Banking

Theory, Practice and Education

Edited by Mohamed Ariff and Munawar Iqbal

After barely half a century of experience, Islamic banking has become established as a niche industry across the world, offering new and sophisticated financial products designed to be compliant with Islamic legal principles and common law. This comprehensive book explores the theory, principles and practices underpinning this rapidly expanding sector of banking.

Chapter 3: Ethical Principles in Islamic Business and Banking Transactions

Mervyn K. Lewis

Subjects: economics and finance, financial economics and regulation, islamic economics and finance


Mervyn K. Lewis 1.0 ISLAM AND JUSTICE Islam means the ‘tranquillity’ and inner ‘peace’ (salam) that can be attained by submitting, surrendering, or giving oneself up to the Will of God as manifest in the revealed law. This word comes from the inquiry that lies at the core of the whole edifice of Islam: what kind of life ought one to live to attain bliss in the here and the hereafter (1:1–6; 7:96)?1 The answer lies in reflecting on the purpose of life, i.e. why are we here? The revelation, the Holy Qur’an, the sacred book of Muslims, responds to such questions by taking the position that everything in the universe is part of a meticulous plan being executed by the First Cause – Allah – the Arabic word for God. Allah is One, Incomparable, Sovereign, Eternal, Omniscient and Omnipotent. His Will reigns supreme in the universe. He is the Creator of all, each with sustenance and purpose (11:6). He has created humankind not in vain but to serve as His viceroy on the earth (6:165; 35:39; 57:7). In this capacity, people are required to act as agents and trustees of God in managing the resources of the earth such that all benefit equitably and the original balance in creation is maintained (55:7–9). To this end, trustees are bound by a covenant with God (7:172; 20:115), given limited free will (34:9; 35:15–16; 47:38), monitored on a...

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