Purpose The purpose of this paper is to examine over a decade of Islamic finance legal scholarship to identify unresolved tensions between form, substance and regulatory accommodation and to advance an integrative legal-theoretical framework for Islamic finance (IF). This paper includes legal theoretical framework and thematic distribution of the topic, defines the scope of research, consolidates the main findings and identifies areas for future researcher. Design/methodology/approach Doctrinal analysis is used to explore formal interpretation of prohibition of riba, while socio-legal analysis examines accommodation of IF across Europe, North America and Asia. Through a black letter approach, this study analyses debates on the fundamental prohibition of riba as well as the legislation and regulations applicable to IF in London, New York, Dublin, Kuala Lumpur and Dubai. The doctrinal approach, combined with the socio-legal method, examines the accommodation of IF in various jurisdictions through modification and legal transplant. Findings The first finding is the misalignment between regulators and adjudicators particularly in two jurisdictions, that is, Pakistan and the USA. Second, substantive interpretation of Islamic principles of finance is a crucial need of the time as explained in litigation on charity clause in Pakistan. Third, jurisdictional integration is long-lasting because of a flexible legal system as developed by the UK. Research limitations/implications The scope of this paper is limited to examination of legal and regulatory regimes that facilitate and hinder IF with specific focus to form and substance debate in the context of prohibition of riba and jurisdictional approaches to IF through law and regulation. Originality/value This study uniquely explains how form–substance gaps create enforceability and legitimacy risks with direct relevance for Islamic accounting and Shariah governance.
Ismail et al. (Mon,) studied this question.