The Role of Istihsan in Applying Maslahah in Islamic Finance

Abstract

This paper identifies the role of istihsan in Islamic finance that should be emphasized to strengthen the element of Shariah compliance. Over the period, it is argued that applying Shariah rulings in Islamic finance has witnessed several challenges and difficulties resulting in some aspects may need toleration for the sake of maslahah. The data of this study is based on library research, by referring to classical and contemporary books of usul fiqh, academic and non-academic works and related resolutions from the BNM and SCM. The findings reveal that the role of istihsan can be manifested through providing an exceptional ruling from general rulings, considering modern norms of business practices before applying rulings, harmonizing between Shariah and civil laws, and adapting Islamic finance within the change of circumstance. While this study utilizes limited secondary data as well as it focuses on Malaysia, it engages with the real Islamic finance issues in this country. Thus, this study is hoped to benefit many parties who involve directly and indirectly in this industry, particularly to deeply understand the application of Shariah principles in Islamic finance.