ANALYZING THE INFLUENCE OF LEGAL MAXIMS’ INTERPRETATION ON THE CONTEMPORARY FATWAS IN ISLAMIC FINANCE

Abstract

Legal maxims (qawāʿid fiqhiyyah) are primary concepts of Islamic jurisprudence that help the scholars as well as the practitioners in the interpretation of Shari’ah law. Maxims in Islamic finance play an essential role in structuring financial contracts, clarifying uncertainty, and maintaining ethical standards. Yet, contemporary fatwas and financial instruments tend to misinterpret such legal maxims, resulting in inconsistency of judgments and even violations of maqāṣid al-Shari’ah (objectives of Islamic law). This research critically examines the impact of legal maxims on modern fatwas in Islamic finance, identifying cases where their application has been exploited, overgeneralized, or applied out of context. Through documentary analysis of selected fatwas, the study uncovers recurring patterns of misinterpretation, their effects on financial transactions, and their consequences on the integrity of Islamic financial practice. Furthermore, the research examines how such misinterpretations contribute to Shari’ah non-compliance, ethical problems, and financial instability in the Islamic finance industry. Moreover, the study examines the underlying reasons behind such misinterpretations, including the impact of economic pressures, shifting market demands, and methodological gaps in fatwa derivation. As financial instruments become more complex, there is more significant potential for overgeneralization, selective application, and decontextualization of maxims; therefore, more specified methodological guidelines are needed by scholars and regulatory bodies. This research contributes to the current literature on Shari’ah-compliant finance by its demand for a more systematic, principled, and transparent approach to legal maxims' interpretation and application to the practice of Islamic finance so that Islamic financial practice can remain ethically relevant and connected to the higher objectives of Islamic law. By addressing relevant issues, the research targets enhancing the process of issuing a fatwa and stabilizing Shari’ah-compliant financial activities. The results highlight the need for a determined and situationally cautious application of legal maxims to avoid violation of Shari’ah and Islamic financial principles. The research ends by making suggestions for scholars, regulatory bodies, and financial institutions to ensure that fatwa derivation does not drift from classical jurisprudence or contemporary economic realities.

Date of Award	2025
Original language	American English
Awarding Institution	HBKU College of Islamic Studies