Ethics of Business Transactions in Islam and Their Application in Current Economic Practices: A Contextual Analysis for Pakistan

Abstract

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This article explores the ethical foundations of business transactions in Islamic teachings and critically examines their applicability within Pakistan’s contemporary economic landscape. Drawing upon primary Islamic sources—namely the Qur’an and Sunnah—and classical Islamic jurisprudence, the study delineates core ethical principles such as honesty, transparency, justice, prohibition of ribā (interest), gharar (excessive uncertainty), and maysir. It further investigates the extent to which these principles are integrated into Pakistan’s formal financial institutions, regulatory frameworks, and informal business practices. The analysis reveals both commendable strides—particularly in the development of Islamic banking—and persistent challenges, including regulatory gaps, ethical inconsistencies in conventional banking, and socio-cultural barriers to ethical commerce. The article concludes with policy-oriented recommendations for enhancing ethical compliance in Pakistan’s economy through education, regulatory reform, and institutional strengthening, thereby aligning national economic practices more closely with Islamic ethical imperatives.