Pyramid of Maslahah for Social and Economic Welfare:The Case of Bank Islam Malaysia Berhad

Abstract

Islamic financial system is no longer a new phenomenon. The existence of Islamic banking over the past fifty years has proven that Islamic financial system has a stand and desirable by society. Maqasid shari’ah or the higher objective of shari’ah is viewed by the contemporary Muslim bankers and academicians as an alternative tool to emphasize on issues relating to social and economic ends of financial transactions. Instead of over emphasizing on profit maximization in conventional banking, the Maqasid shari’ah mechanism contributes to the reorientation of Islamic finance and banking. This is seen in the social welfare institution process of innovation as promoted by Islamic moral economy. Islamic economy suggested the establishment of Islamic social banking in order to fulfil the social and economic needs of the Muslim. Thus, Islamic financial institutions (IFIs) focus is mainly on the social and economic welfare, benefits, and needs. Moral values is the major mutual concern of the system, neither profit maximization nor competitiveness as practiced by existing finance and banking system. This paper shed light on the prospects of pyramid of maslahah in social and economic welfare area of IFIs such as the practice of charity, waqf, zakat and Takaful. Bank Islam being the pioneer Islamic bank in Malaysia is chosen in assessing their role on promoting social and economic welfare as outlined by maqasid shari’ah.

Keywords: Islamic financial system, social and economic welfare, maqasid shari’ah, social banking