Islamic Banking And The Standardization Dilemma: Comparative Legal Perspectives
DOI:
https://doi.org/10.69548/d-jess.v4i2.71Keywords:
Islamic Banking, Legal Standardization, hariah Governance, Comparative Law, Regulatory FrameworkAbstract
The growth of Islamic banking across multiple jurisdictions has brought into sharp focus the ongoing challenge of legal and regulatory standardization. This article explores the implications of divergent interpretations of Shariah principles and varying national legal systems on the consistency and credibility of Islamic financial practices. Through comparative case studies of Malaysia, the Gulf Cooperation Council (GCC) countries, and the United Kingdom, the paper analyzes how different jurisdictions have approached the formulation and implementation of Islamic banking laws. The study highlights key legal structures, Shariah governance models, and regulatory oversight mechanisms, revealing how legal fragmentation contributes to operational inefficiencies, investor uncertainty, and obstacles to cross-border integration. The paper also examines the role of international standard-setting bodies such as the Accounting and Auditing Organization for Islamic Financial Institutions (AAOIFI) and the Islamic Financial Services Board (IFSB), assessing their effectiveness in promoting harmonization. These include strengthening transnational regulatory cooperation, encouraging mutual recognition agreements, and developing hybrid legal models that integrate Shariah principles within robust national financial frameworks. Ultimately, the article argues for a pragmatic path toward standardization, one that balances doctrinal authenticity with legal interoperability to support the sustainable growth of Islamic finance.
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