ENGLISH: The Analysis of Predominant Equity Shariah Screening Indices and the Unified Shariah Screening Standard Approach

Abstract

Islamic finance has emerged as one of the fastest-growing segments of the global financial system, expanding from early experiments in Islamic banking during the 1960s to a multi-trillion-dollar industry today. Among its most dynamic components, the Islamic equity market provides investors with an avenue to participate in capital markets while adhering to Shariah principles. However, the challenge of defining which equities are permissible (halal) or impermissible (haram) has led to the creation of various Shariah-compliant equity screening indices. While qualitative filters, excluding prohibited industries such as alcohol, gambling, and conventional banking, remain relatively consistent, quantitative screening criteria vary widely across global and regional indices such as the Dow Jones Islamic Market Index (DJIMI), MSCI Islamic Indices, FTSE Shariah, AAOIFI, S&P, ISRA-Bloomberg, ISSI (Indonesia), and Meezan Bank (Pakistan). These discrepancies result in situations where a stock may be considered compliant under one index but non-compliant under another, raising questions of credibility, investor confidence, and the legitimacy of Shariah governance. This paper undertakes a qualitative thematic analysis of predominant Shariah equity screening indices, with emphasis on the methodological divergences and their implications for global Islamic finance. Using secondary data from index methodologies, regulatory standards, and peer-reviewed academic literature, the study identifies three comprehensive themes: Uniformity in qualitative exclusions, Divergence in quantitative thresholds and Calls for a unified global screening standard.