Operationalising Usul al-Fiqh as a Research Methodology for Contemporary Islamic Finance: Venture Capital and Private Equity as a Case Study

Abstract

This paper proposes a methodological framework that operationalises usul al-fiqh (Islamic legal theory) not merely as a source of substantive law but as a systematic method for analysing contemporary Islamic finance. Although existing scholarship has examined maqasid, legal maxims, Shariah governance, and particular Islamic financial structures, comparatively limited attention has been given to consolidating these strands into a sequential protocol for assessing integrated institutions. This matters commercially because GP management fees and preferred-return hurdles may be assessed as individual contractual features while their combined operation changes the risk-sharing economics presented to LPs and entrepreneurs. Using Islamic venture capital (VC) and private equity (PE) in Malaysia as an illustrative case study, the paper shows how distinct juristic resources can perform different analytical functions: the hierarchy of evidence (adillah) establishes normative baselines; legal maxims (qawa'id fiqhiyyah) test structural coherence; and the higher objectives (maqasid al-Shariah) support disciplined assessment of purposes and consequences. The application shows how the framework can identify matters requiring further Shariah analysis when contractual relationships, remuneration mechanisms, governance arrangements, and risk allocations interact at the institutional level. The paper therefore offers a nine-step Usuli Structural Analysis Framework (USAF) that moves from factual conceptualisation and institutional mapping to legal characterisation, substantive analysis, and whole-institution coherence. USAF is presented as a transparent and auditable synthesis for researchers rather than as a substitute for qualified juristic determination.