Abstract
Purpose This paper aims to analyse the concept of form over substance and introduces the term substance gap to the literature. The substance gap is defined as the difference between the way a concept is expressed and its intended result. Besides, the study investigates the issue from both classical and contemporary viewpoints. Design/methodology/approach The methodology adopted in this paper is descriptive research. Findings This paper has depicted the substance gap in contemporary contracts and found that form is equally important as substance in Islamic finance contracts. This paper offers a fresh outlook on form and substance to highlight the importance of the issue and its significance. The findings of the study will help researchers address the issue at its roots and help them to bridge the gap between the form and substance of Islamic finance contracts. Originality/value This paper investigates the substance gap in contemporary contracts that exists between the fiqh rules and conditions of an Islamic contract, and their development and construction. Further, the gap could also be attributed to the pressure to cope with a complicated modern finance environment.
Highlights
IntroductionThe Islamic financial system has achieved tremendous progress
Over the past decades, the Islamic financial system has achieved tremendous progress
Identifying the substance gap is meant to pinpoint the area of disjoint between the form and its intended substance
Summary
The Islamic financial system has achieved tremendous progress. It has faced criticisms regarding its operations, products and services. Critics have referred to it as putting old wine in a new bottle by changing the name and adding a Sharīah-compliant tag (Zaher and Hassan, 2001; Hasan, 2015). Ahmed (2011a) further reasoned that Islamic financial transactions are compatible with Sharīah (Islamic law) in form, but fail to meet its substance and spirit. Many debates have given attention to the application of “form”, circumventing the “economic substance” of Islamic financial transactions. This raises concerns regarding how authentic some Islamic financial transactions are
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