Degree

Master of Science in Islamic Banking & Finance

Department

Department of Finance

Faculty/ School

School of Business Studies (SBS)

Date of Submission

Spring 2024

Supervisor

Dr. Mohsin Sadaqat, Assistant Professor and Head of Finance Lab, Department of Finance, Institute of Business Administration (IBA), Karachi

Keywords

Blockchain, Islamic banking, Shariah compliance, Smart contracts

Abstract

The study discusses the adoption of blockchain through smart contract applications to ensure that Islamic banking meets Shariah obligations in pursuit of transparency, efficiency, and inclusivity. Through thematic analysis of literature, expert interviews, and case studies, this paper attempts to find out how blockchain assures Shariah-compliant financial transactions through the automation of processes with implementations in conformity with Islamic principles, such as, but not limited to, the prohibition of Riba and Gharar. The findings present that technologists and Shariah scholars need to combine their efforts in exploiting regulatory frameworks that protect moral integrity and at the same time allow for innovation. Moreover, decentralized governance implications, both from a practical and theoretical point of view, as well as regulatory challenges and the development of Shariah-compliant codes, are discussed. The study, therefore, concludes that though blockchain technology has enormous potential to bring transformation in Islamic Finance, there is a need to continue with research and have a regulating mechanism in a balanced manner so that challenges related to security, scaling, and the need for Shariah-compliant coding practices are met.

Document Type

Restricted Access

Submission Type

Research Project

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