From Shariah-Compliant to Shariah-Based: Toward an Islamic Banking Model Genuinely Grounded in the Maqasid al-Shariah

In the third quarter of 2025, murabaha (cost-plus-profit sale financing contract) and commodity murabaha accounted for 78.7% of global Islamic financing, while profit-and-loss sharing contracts remained residual (IFSB, 2026). Half a century after the first institutions appeared, the principle presented as the foundation of Islamic finance is not its practice. This paper asks why, and what institutional architecture could remedy it. It locates the origin of the phenomenon upstream of the balance sheet, in the choice of institutional vehicle: modern Islamic finance took shape by adopting the commercial bank as its form, together with the liabilities that define it, which imposed a funding structure incompatible with risk sharing on the asset side. This constraint is a special case of a more general impossibility, formulated here as the trilemma of Islamic intermediation: no institution can simultaneously issue liabilities convertible at par on demand, hold assets in genuine profit-and-loss sharing, and operate without an external loss absorber. The proposition draws on the monetary theory of information insensitivity. Normative assessment proceeds through Ibn Ashur’s maqasid al-mal, crossed with Ahmed’s typology and applied to the pairing a contract forms with the architecture that houses it. It yields a result the paper does not exempt its own proposals from: musharaka, a Shariah-based contract, produces a Shariah-compliant outcome once housed within an unchanged liability architecture. The paper proposes a three-tier architecture and establishes, through the alpha factor, that the prudential lock barring this transition is the endogenous sanction of mimicry and loosens under existing rules.