Shariah Utility and Economic Impacts of Contemporary Islamic Banking: A Comparative Study of the Views of Pakistani and Egyptian Scholars

مروجہ اسلامی بینکاری کی شرعی افادیت اور معاشی اثرات: پاکستانی اور مصری علماء کی آراء کا تقابلی مطالعہ

Abstract

This article examines the Shariah utility and economic impacts of contemporary Islamic banking through a comparative study of the views of Pakistani and Egyptian scholars. It argues that modern Islamic banking cannot be evaluated merely by its institutional label or formal replacement of interest-based terminology; rather, its legitimacy depends on the substantive application of Shariah contracts, genuine asset ownership, risk-bearing, transparency, and alignment with the objectives of Islamic law. The study compares the supportive, reformist, and critical approaches found in Pakistani scholarship with the legal, fatwa-based, and maqasid-oriented approaches prominent in Egyptian discourse. Pakistani scholars, particularly Mufti Muhammad Taqi Usmani, generally regard Islamic banking as a necessary transitional mechanism for moving away from interest-based finance, provided that contracts such as murabahah, ijarah, musharakah, and mudarabah are implemented according to their proper Shariah conditions. Critical Pakistani voices, however, question whether current Islamic banking has sufficiently moved beyond the logic of conventional finance. Egyptian scholars display a similarly diverse range of positions: some emphasize strict prohibition of riba and caution against legal stratagems, while others evaluate banking practices through public need, economic development, and maqasid al-Shariah. The article concludes that contemporary Islamic banking has significant Shariah and economic value, especially in providing Muslims with alternatives to interest-based banking and promoting asset-linked finance, but its effectiveness remains conditional upon stronger Shariah governance, greater risk-sharing, social finance integration, and a clearer movement from formal compliance toward genuine maqasid-based transformation.