On evaluating contemporary Islamic finance structures
Mufti Faraz Adam
What this source says
The test of a contemporary Islamic finance product is not whether it carries a Shariah board's approval — though that is necessary — but whether the underlying economic substance corresponds to its legal form. A Murābaḥah where the bank never genuinely takes ownership risk, an Ijārah where the bank's exposure to property risk is engineered to zero, a Mushārakah where the partner is contractually shielded from any loss: these may pass the legal-form test while failing the economic-substance test. The latter is what classical fiqh actually requires.
Wording inside quotation marks is quoted from the source. The rest is this notebook’s summary of it — read the original before relying on it.
Provenance
- Source
- Documented from Amanah Advisors publications + UK Islamic finance lectures
- School / basis
- Hanafi · UK-based · Amanah Advisors (Shariah advisory)
- Added
- 2026-05-27
- Trust
- A position recorded from a named, published source — reported accurately, not independently adjudicated.
Compiler’s note
Author affiliation disclosure: Faraz Adam founded Amanah Advisors, which provides Shariah advisory services on Islamic finance products. Documented position is consistent with his published work. Useful for /audit + /structures.
Topics
islamic-financestructureshiyalcontemporary
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