Institutional Evolution in Islamic Commercial Law: Aligning Classical Jurisprudence with Maqasid al-Shariah in the Modern Economic Paradigm

Abstract

This paper provides a critical, comprehensive examination of modern Islamic economic frameworks by analyzing the structural origins of early Islamic commercial jurisprudence and its subsequent institutional growth. Historically, the advent of Islamic commercial law introduced a profound paradigm shift in economic thought, embedding strict ethical mandates, equitable trade practices, and rigorous consumer protection protocols into its core doctrines. By comprehensively comparing these classical legal methodologies with contemporary global banking models, the study highlights the complex trajectory of modern Islamic financial reconstruction and its frequent, problematic departure from foundational jurisprudential objectives. While contemporary Islamic financial institutions initially emerged to counter the ideological and functional dominance of secular capitalist banking by proposing a socio-religious economic alternative, they have systematically struggled to manifest substantive operational divergence in practice. The industry's current reliance on structural mimicry—engineering Shariah-compliant replicas of conventional debt instruments—rather than cultivating authentic, risk-sharing enterprises indicates a severe methodological gap between theoretical ideals and market realities. Consequently, this paper argues that bridging this widening divide necessitates a deliberate, methodological return to the higher objectives of Islamic law (Maqasid al-Shariah). Through a rigorous normative and historical critique, the study concludes that operationalizing foundational justice within the Maqasid framework offers the most viable, sustainable blueprint for harmonizing traditional legal theory with the demanding socioeconomic realities of the twenty-first century