The evolution of the Islamic banking and finance (IBF) industry from its humble beginnings in the 1970s has now grown to comprise of more than 600 Islamic banks and 90 takaful companies in over 75 countries. The industry is now managing US$1 trillion in assets with a growth rate of 15-20 per cent per year. Many view this stage as a seamless continuation of the three earlier decades (1970s-1990s) of IBF's development, in which scholars and practitioners habe ladi down its philospohical and conceptual foundations. This expansion might be seen as a success story which shows the world that Islam and the Islamic finance industry can contribute positively to solving modern finance needs. Islamic finance is one the main practical manifestation of the Islamic worldview in the field of economics and finance as well as one of the most visible features of Islamic revivalism in the latter part of the twentieh century. Some, however, do not view this development within such a short period of time as a natural progression from the pioneering stage. Many questions have been raised about the genuineness of IBF and the nature of its progress. While evaluating progress is always a subjective enterprise, the criticisms cannot be underestimated, especially if IBF intends to promote a real economy that can be sustainably developed in the future. This paper attempts to highlight the development of Islamic finance by looking at its emergence and the approaches taken in its development. Subsequently, the directional trends of development and their future outlook will be outlined. This paper argues that Islamic finance should be directed toward providing meaningful development in the twenty-first century. IBF must be competent in order to deliver its full potential as a system, not merely a stopgap means of surviving the crisis. IBF must go above and beyond by providing guidelines for managing a good economy, stimulating growth and development, promoting socio-economic justice, employment and stablitity, IBF cannot limit itself to merely offering economic and financial practices that satisfy the minimum standard of legal requirements.

The paper aims to investigate the dimensions of maqasid al-Shari'ah in Islamic finance by exploring the ends (maqasid) and the means (wasa'il). Those would clarify the nature and goals of Islamic finance as well as its directional development. Using literature in English and Arabic sources in the area of maqasid al-Shari'ah, as well as from the reading of the primary sources (the Qur'anic texts/nusus), the paper attempts to delineate the dimensions that would constitute the ends (maqasid) and the means (wasa'il) in Islamic finance. The paper explicates three specific ends (maqasid) in Islamic finance, namely wealth circulation, fair and transparent financial practices and justice at the micro- and macro-level. To achieve those ends, the Shari'ah provides means (wasa'il) such as facilitating financial contracts, establishing values and standards and instituting social responsibility. The findings of this paper will give insights on the ends (maqasid) and the means (wasa'il) in Islamic finance based on the maqasid al-Shari'ah discourse. It could be used as a reference in understanding the nature of Islamic finance and in developing a sound and solid Islamic finance based on the Shari'ah.

The emergence of Islamic finance as a system of thought and practice is timely in the midst of world crisis and the uncertain proposals for solving it. It is hoped that Islamic finance offers a coherent perspective for understanding real economic problems as well as a genuine alternative to the very foundations of how economics and finance should be managed to actualize human prosperity. In addressing those expectations and challenges, sufficient attention to the foundations should be given to develop solid conceptual scheme of a new finance in Islamic perspective and to resolve the tensions in the current development. This paper attempts to discuss the foundations of Islamic finance and the requirements in developing Islamic finance from the basic principles of maqasid al-Shari'ah (the objectives of Shari'ah). Islamic finance, in this perspective, must realize its full potential as a system, not merely a lawful means in doing financial business or a stopgap means of surviving the crisis. It must go beyond that to provide the guidelines for managing a good economy, stimulating growth and development, realizing socio-economic justice and promoting employment and stability as implied in the objective of Shari'ah (maqasid al-Shari'ah).

Islamic finance is now at the stage of internationalisation, witnessing greater integration between the Islamic financial industry and the global financial system. Islamic finance has gradually evolved to become a dynamic and competitive form of financial intermediation. The Islamic financial industry has been developing ways to facilitate its interaction and integration into the global financial system. We see Islamic finance attracting the attention of the global audience and transcending religious, political and geographical boundaries. It has the potential to be adopted as an alternative to the global financial system...

Islamic finance is now at the stage of internationalisation, witnessing greater integration between the Islamic financial industry and the global financial system. Islamic finance has gradually evolved to become a dynamic and competitive form of financial intermediation. The Islamic financial industry has been developing ways to facilitate its interaction and integration into the global financial system. We see Islamic finance attracting the attention of the global audience and transcending religious, political and geographical boundaries. It has the potential to be adopted as an alternative to the global financial system...

Islamic finance attempts to rearrange the modern financial practices to be in line with Shari'ah principles and requirements. The industry has grown considerably over the last three decades and has a global reach. We contend that this trend is being driven not only by operational compliance with the requirements of Islamic law but also because of the objectives and values it promotes. Islamic banking and finance (IBF) was intended to bring an Islamic vision of the economy to the financial sphere in an effort to realize human wellbeing (maslahah) and a just and fair order of society. Financial practices are to be arranged to meet those objectives. Adherence to maqasid al-Shari'ah as the grand objective of Islam is necessary for developing genuine and indisputable �Islamic� finance. The �Shari'ah-compliant� title carries the expectation of a financial system and practices that are truly based on all the tenets of the Shari'ah, namely the 'aqidah, Islamic legal principles (al-ahkam al-shar'iyyah) and ethics (akhlaq), and that serve the noble goals prescribed by Islam (maqasid al-Shari'ah). However, recently there have been growing debates about the extent to which the objectives of the Shari'ah are being realized in the Islamic financial industry. It is argued by some that satisfying the minimum legal requirement of Shari'ash compliance is not sufficient.

Islamic finance uses the Shari'ah as the backbone of its system. The Shari'ah not only contains the principles and foundations upon which the financial system is established, but alos provides guidance for setting the industry's direction. Practically speaking, it is the Shari'ah scholars, in their role as interpreters of the Shari'ah, who are charged with guiding the industry. They have a key role to play in maintaining the credibility and integrity of the industry by requiring Islamic financial institutions (IFIs) to adhere not only to the Shari'ah's technical requirements but to its values and principles as well...