PROHIBITED ELEMENTS IN ISLAMIC FINANCIAL TRANSACTIONS: A COMPREHENSIVE REVIEW (2024)

Authors

• Buerhan Saiti
• Adam Abdullah

DOI:

Abstract

This paper analyzes prohibited elements in transactions from ashari’ah perspective, since it is obligatory on the individual (fardhu‘ayn) to understand the Islamic law of transactions (fiqh mu’amalat).Islam is not only a religion, but also a complete way of life. Islam hasclearly forbidden all business transactions that lead to exploitationand injustice in any form to any of the parties of a contract. Islamrequires that all financial and business transactions be based ontransparency, accuracy, and disclosure of all material information sothat no one party takes advantage of other parties. There is wisdom(hikmah) behind every prohibited transaction and in order topractice business and banking activities that are genuinely shari’ahcompliant,
it is important to understand the prohibited elements inIslamic law. Accordingly, prohibited elements such as riba, gharar,qimar, maysir, fraud and coercion are discussed, as well as, theimportance of the legality of the subject matter. Sahih, fasid, batilcontracts and extrinsic conditions are covered in respect to differentschools of thought.