Adoption of Islamic Financing Among Halal Entrepreneurs Based on the Maqasid Sharia Framework

Abstract

This qualitative study aims to explore the adoption of Islamic financing among halal entrepreneurs. By adopting the maqasid sharia framework of Imam Al-Ghazali that includes the elements of preserving faith, preserving life, preserving intellect, preserving posterity, and preserving wealth, the study delves into consumers’ Islamic financing experiences through semi-structured interviews with three Islamic financing consumers in Malaysia. Based on the findings, the element of preserving faith is associated with the trust in the principles of Islamic financing, while the preservation of life and the preservation of intellect are related to the government’s enforcement and consumer perceptions of Islamic financing, respectively. Finally, while the preservation of posterity is related to the social influence in encouraging consumers to adopt Islamic financing, the element of preserving wealth is associated with the alternative financial resources among them. The findings also demonstrate that the halal entrepreneurs’ views on preserving the five maqasid sharia elements are important to resolve syubhah financing. Therefore, Islamic financing institutions should develop strategies to expand the knowledge of Islamic financing among halal entrepreneurs on the benefits of halal services and how they differ from conventional financing. Since halal financing is highly in line with maqasid sharia’s aim to serve as one of the halal sources of income; therefore, the adoption of Islamic financing is crucial for developing the growth of the halal economy and fulfilling the objective of maqasid sharia in practice.