Issues and Challenges of Artificial Intelligence (AI) in Islamic Economic Development: Towards a Maqasid-Oriented Governance Framework
Keywords:
Artificial Intelligence (AI), Algorithmic Gharar, Maqasid Al-Shariah, AI Governance, Islamic EconomicsAbstract
Artificial intelligence (AI) is spreading rapidly across Islamic banking, wealth management and zakat institutions, yet existing studies examine it sector by sector and rarely explain how algorithmic systems collide with core Shariah rules. In particular, the literature asserts but does not demonstrate that AI can generate gharar (prohibited contractual uncertainty), and it offers little explanation of why conventional AI governance is insufficient for Islamic institutions. This study addresses these gaps through an integrative literature review of 19 peer-reviewed sources published between 2019 and 2026, with a contextual focus on Malaysia and Indonesia, analysed thematically through the maqasid al-shariah framework. AI is found to be applied in four domains, namely Shariah compliance and governance, Islamic banking services, Islamic wealth management and Islamic social finance, and to face six clusters of challenges, of which algorithmic opacity and gharar is the most Shariah-specific. The study makes three theoretical contributions. First, it conceptualises algorithmic gharar and identifies five technical mechanisms, namely adaptive re-pricing, black-box decision rules, automated asset screening, probabilistic generative outputs and data asymmetry, through which AI can introduce uncertainty into the price, subject matter or consent of a contract, and it assesses them against the classical conditions of impermissible gharar. Second, it explains the inadequacy of conventional governance as an intersection gap: responsible-AI frameworks manage outcome risk but not contract validity, while Shariah governance reviews static products but not adaptive models. Third, it proposes a five-layer maqasid-oriented AI governance framework with a phased implementation roadmap for regulators and Shariah authorities in Malaysia and Indonesia.
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