Sharīʿah Perspectives on Harmful Practices in Stock Markets: From Classical Fiqh to Modern Finance

Abstract

This paper examines the jurisprudential framework (fiqh al-muʿāmalāt) governing modern stock markets, focusing on the distinction between legitimate trade and speculative practices. Drawing on classical sources such as Badāʾiʿ al-Ṣanāʾiʿ of al-Kāsānī and Radd al-Muḥtār of Ibn ʿĀbidīn, as well as contemporary analyses by Muftī Muḥammad Taqī ʿUthmānī, Abū ʿUmar al-Dibyān, and Dr. Muḥammad Tawfīq Ramaḍān, the paper highlights persistent challenges in aligning modern financial instruments, such as shares, bonds, and derivatives, with Sharīʿah requirements. Particular attention is given to the harmful market practices that undermine genuine trade: absence of possession (qabd) at the time of contract, speculative re-selling of non-possessed goods, artificial price manipulation through hoarding, and the distortion of supply-demand dynamics by fabricated rumours. These factors introduce gharar (excessive uncertainty) and maysir (gambling-like risk), which render such transactions impermissible. The study argues that effective Sharīʿah-compliant market regulation requires a return to authentic principles of trade, possession, transparency, and real economic activity, while resisting the lure of profit from mere price differentials.