Information systems for adaptive shariah compliant financial services: defining adaptation constructs

Abstract

Asymmetry of information in financial service creates excessive uncertainty termed gharar, which makes a financial transaction invalid (haram) in Islamic Law (Shariah). Information systems customised to shariah compliant financial service (SCFS) can make information flow more symmetric and can in turn reduce gharar. Based on information related to emergent SCFS design stakeholders i.e. financial regulators, bankers and customers make adaptation and migration decisions. However, unique nature of SCFS design requires adaptation (migration) of emergent SCFS in compliance to shariah. We discuss general service and SCFS literatures to define structural constructs of SCFS. We then discuss qiyas, which is the juridical principle of defining emergence for expansion in shariah rulings, and theory of deferred action, which is a design adaptability theory drawing in complexity. The adaptation construct for SCFS designs is defined and discussed in the joint framework of qiyas and theory of deferred action.