This lesson explores the role of ethics, social responsibility, and the higher objectives of Shariah (Maqasid) in the decision-making of Islamic financial institutions.

6.1 Ethics and Values in Islamic Finance
It is undisputable that Islamic banks cannot disengage themselves from ethical and moral considerations. The conduct of Islamic financial institutions is expected, according to the IFSB, to be consistent with business ethics that are reflective of Shariah principles .

6.2 Maqasid al-Shariah (Higher Objectives)
While compliance with the rules of Shariah (e.g., the prohibition of riba) is essential, it is not sufficient. The notion of Shariah compliance may not provide a complete and convincing response if Maqasid al-Shariah is disregarded . This reflects the debate between “Shariah-compliant” products (which are merely legal) and “Shariah-based” products (which are also ethical and socially purposeful) . The pursuance of profits in the absence of interest is essential to the existence of Islamic banks, but their broader mission cannot be limited to the generation of financial returns .

6.3 Value-Based Intermediation (VBI)
Modern Islamic banking is increasingly being reimagined through the lens of Maqasid Shariah to achieve societal well-being. Studies suggest that Islamic banks in some regions, like Pakistan, are realizing the broader objectives and are conducting real economic activities that bring employment and distribute charity funds, alongside corporate social responsibility for the community’s welfare . This approach proposes that Islamic banks should also provide microfinancing to the underprivileged segments of society, which will empower and uplift their communities.