The Bubble Economy in the Global Capital Market: Unraveling the Boundaries of Gharar and Maysir in the Fatwa of the Al-Azhar Research Academy

Abstract

Background: The rapid expansion of globalization and financial innovation has generated highly complex, digitized, and speculative capital market instruments. In the intersection of global finance and Islamic jurisprudence, Western-designed transactions like short selling and derivatives often trigger fierce dialectics regarding whether their abstract legal structures and decoupling from the real economy violate the foundational ethico-legal boundaries of Islamic commercial law (muamalah).

Purpose: This study aims to critically analyze the authoritative legal perspective and collective theological rationale ('illat) of the Al-Azhar Islamic Research Academy (Majma’ al-Buhuts al-Islamiyyah) in Egypt concerning the validity of short selling and conventional derivative instruments (options, futures, and swaps), while mapping its macro-economic, systemic, and geopolitical implications for the global Islamic capital market.

Methods: A normative-juridical approach combined with a qualitative-descriptive library research design is employed. The study utilizes conceptual, fatwa-based, and cross-border comparative approaches to examine primary data from the original manuscripts of Al-Azhar fatwa decrees alongside secondary legal materials, including classical fiqh texts, reputable international journals, and macroeconomic reports. The data is processed through deductive content analysis to deconstruct the institutional methodology of legal reasoning (manhaj ifta).

Results: The findings demonstrate that Al-Azhar establishes an absolute prohibition (haram) on short selling and conventional derivatives due to fundamental structural defects, specifically the violation of perfect ownership (milk al-tamm) requirements, the invalidity of digital constructive possession (qabdh hukmi), and the artificiality of cash settlements. These products are condemned as fictions (ba'i al-ma'dum and ba'i al-kali' bi al-kali') saturated with cyber-gambling (maysir) and systemic uncertainty (gharar) that foster a fragile bubble economy. However, Al-Azhar introduces a strict margin of tolerance (Siyasah Syar'iyyah) allowing physical commodity futures under modified salam or istishna’ contracts strictly for state-level macroeconomic hedging (hajah syari'iyyah)

Implication: This study proposes a rigorous legal screening and standardization model for international Sharia capital market regulators to prevent "fatwa shopping" and to filter foreign capital inflows without severing global financial integration. It advocates that the global Islamic financial industry must shift from mere legal cosmetics (hiyal syar'iyyah) toward generating genuine, real-sector-anchored risk-mitigation products that uphold the preservation of wealth (Hifz al-Mal) and distributive equity.

Originality: This study introduces an institutionalized, macroeconomic critique of global capital market products by evaluating the collective ijtihad (ijtihad jama'i) of a world-class institution rather than individual textual jurisprudence. By bridging classical ownership doctrines with contemporary cyber-trading dynamics and Western economic crisis critiques, it provides a novel macro-legal synthesis framework to reconcile cross-border fatwa disparities between Middle Eastern and Southeast Asian jurisdictions.