The word Shariah is an Arabic term which literally means “the way”, “a path to a watering place”, or “a clear path to be followed.”

The phrase “a path to watering place” means that whoever follows this path will reach a watering place. Classically, a watering place is understood as a place that saves life, sustains life, and allows life to flourish. Imagine a thirsty traveler stumbling out from under the hostile and hot desert sun and arriving at a place with cool and clean water.

Water does not restrict its benefit to certain classes of people—it benefits to everyone equally. Likewise, Shariah is equally beneficial for Muslims and non-Muslims.

Technically, Shariah it is defined by scholars as the laws of Islam and commandments of God to mankind. It’s the straight path followed by Muslims in accordance with the guidelines of the Quran and teachings of the Prophet Muhammad (peace be upon him). Muslims believe that whoever follows the path of Shariah will be successful both in this world and in the hereafter.

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But Shariah is not limited to within the boundaries of law; it is also a set of norms, values, ethics and laws that guide us in our daily lives. It provides guidance in areas of faith, belief, and worship, but also in economic, business, and trade as well as social, political and cultural conduct.

There are two main and primary sources of Shariah: the Quran and the Sunnah of the Prophet ﷺ. The Sunnah refers to the teachings, sayings, conducts and approval of certain activities by the Prophet Muhammad ﷺ. But the scope of the activities of our daily life is broad: commercial transactions, economic affairs, political issues, and social interactions. Therefore, there’s a third source of Shariah which is known as Ijtihad.

Ijtihad means deriving rulings of new issues from the general guidelines of the Quran and teachings of the Prophet Muhammad ﷺ. For example: digital stock exchanges have only existed for the past 30 years. What rules or Shariah guidelines apply to such modern area of the financial system and what is the basis for these rulings?

Those who specialize in understanding Shariah and make rulings on matters relating to Shariah are called jurists and scholars. The jurists and Shariah scholars of every era address the new issues, problems, and questions which arise that have not been discussed or have not yet appeared.

These experts are well-versed in the Quran and the Sunnah of the Prophet ﷺ. And they know the writings of earlier scholars and their works in the development of Islamic literature. Their main job is to understand the new issues properly and provide the practical solutions within the parameters of Shariah.

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The rapid growth and emergence of Islamic banking and finance industry today is an example of the completeness and comprehensiveness of Shariah. Even though there weren’t any digital stock exchanges 1,400 years ago, the basic principles of the Shariah give us a solid foundation for helping to establish social justice and fairness within the modern financial system.

This is the beauty of Shariah: it provides solid principles and yet provides good flexibility. The Islamic financial system is able to adjust with the changing circumstances of today’s world but in a way that does not compromise the principles of social justice and fairness which are core goals of Shariah.

In the next article, we’ll discuss the topic of charging interest (riba) and why it is prohibited in the Islamic economic system.