Algorithmic Maqashid: An Ethical Critique of Robo-Advisor  Algorithmic Bias in Sharia Stock Screening

Arlinta Prasetian Dewi; Bagus Laksono

doi:10.35897/iqtishodia.v11i2.2760

Authors

Arlinta Prasetian Dewi Institut Agama Islam Riyadlotul Mujahidin Ngabar, Ponorogo, Indonesia
Bagus Laksono Postgraduate School of Islamic Studies, İstanbul Sabahattin Zaim Üniversitesi, Türkiye

DOI:

https://doi.org/10.35897/iqtishodia.v11i2.2760

Keywords:

Algorithmic Maqashid, Robo Advisor, Artificial Intelligence, Sharia Stock Screening, DSN-MUI

Abstract

The rapid integration of Artificial Intelligence (AI) and Robo-advisors in Islamic wealth
management has streamlined the sharia stock screening process. However, this
technological advancement poses a critical ethical dilemma. This qualitative study
utilizes a library research approach to philosophically and technically critique the
algorithmic bias inherent in current Robo-advisors. It argues that contemporary AI
systems perform sharia screening purely mechanically focusing exclusively on
quantitative thresholds (e.g., debt-to-asset ratios and non-halal income limits) while
entirely failing to comprehend the substantive essence of Maqashid Sharia (the
higher objectives of Islamic law). Consequently, a company causing severe
environmental degradation or social injustice may still pass the algorithmic screening
simply by meeting the numerical criteria. By synthesizing Islamic Behavioral Finance
and AI Ethics, this research introduces the concept of Algorithmic Maqashid,
proposing a shift from negative mechanical screening to positive substantive
screening using Natural Language Processing (NLP) to evaluate ESG
(Environmental, Social, and Governance) variables. The findings provide a
foundational blueprint for regulatory bodies, specifically OJK and DSN-MUI, to
establish new regulatory frameworks and sharia compliance audit standards tailored
for Algorithmic Trading and AI technology in the Indonesian Islamic capital market.

Downloads

Download data is not yet available.

References

Akhtar, F., Akhtar, S., & Laeeq, M. (2025). Evolution of Robo-Advisors: A Literature Review and Future Research Agenda. International Journal of Consumer Studies, 49(6). Scopus. https://doi.org/10.1111/ijcs.70131

Asy-Syathibi, B. (2021). Maqashid Syari’ah Imam Asy-Syathibi. Panorama Maqashid Syariah. https://www.academia.edu/download/92412464/482474795.pdf#page=54

Bahri, E. (2022). Green economy dalam prespektif maqashid syariah. Tansiq: Jurnal Manajemen Dan Bisnis Islam, http://jurnal.uinsu.ac.id/index.php/tansiq/article/view/15086

Baining, M. E., Amir, A., Hizazi, A., & Arum, E. D. P. (2024). Finding The Maqashid Al-Syariah Performance

Model On Syariah Management Accounting Information System Values. Al-Risalah: Forum Kajian Hukum Dan Sosial Kemasyarakatan, 24(2), 87–104. Scopus. https://doi.org/10.30631/alrisalah.v24i2.1642

Bao, J., Pan, J., & Ai, S. (2027). The algorithmic bias in creative legitimacy attribution. Journal of Retailing and Consumer Services, 94. Scopus. https://doi.org/10.1016/j.jretconser.2026.105038

Chapra, U. (2001). The Future of Economics: An Islamic Perspective. Jakarta: Shari'ah Economics and Banking Institute (SEBI).

Dewi, A. P., Agus, A., Anis, M., Asiyah, B. N., & Subagiyo, R. (n.d.). Implementation of Financial Module and Cost Control Management in Syariah ERP to Improve Company Profitability. 3(03).

Dziawgo, L., & Dziawgo, E. (2016). Ecological evolution of financial market: Ecologically responsible investment. Eurasian Studies in Business and Economics, 1, 167–178. Scopus. https://doi.org/10.1007/978-3-319-22596-8_11

Fatarib, H., Hayati, S., & Ferliadi, A. S. (2025). Between Legalization And Moral Hazard: A Maslahah and Mafsadah Analysis of Prenuptial Pregnancy Marriage (Kawin Hamil) in Indonesian Islamic Law. Al Risalah: Forum Kajian Hukum Dan Sosial Kemasyarakatan, 25(2), 89–104. Scopus. https://doi.org/10.30631/alrisalah.v25i2.2016

Hakim, R. (2016). Islamic economists in the early 21st century views on business ethics. Falah: Jurnal Ekonomi Syariah, 1(1), 1-13.

Iska, S. (2022). Tafriq Al-Halal ’An Al-Haram Theory In The Selection Of Sharia Stocks: The Comparative Study in The Sharia Capital Market in Indonesia. Jurisdictie: Jurnal Hukum Dan Syariah, https://www.academia.edu download/123992553/pdf.pdf

Khan, H. A., & Ali, H. (2026). AI and Islamic Social Finance: Applications and Challenges. Artificial Intelligence

and the Future of Islamic Finance, 169–179. Scopus. https://doi.org/10.4324/9781003620525-13

Kismawadi, E. R. (2025). Artificial intelligence in Islamic finance: Revolutionizing risk management, auditing,

and shariah compliance. AI’s Transformative Impact on Finance, Auditing, and Investment, 101–122. Scopus. https://doi.org/10.4018/979-8-3373-0129-7.ch004

Kismawadi, E. R., Irfan, M., & Yadav, A. K. (2025). Advancing Islamic Finance With Blockchain and Generative Artificial Intelligence. Generative AI Insights for Financial Decision Making, 241–265. Scopus. https://doi.org/10.4018/979-8-3373-1250-7.ch009

Kofman, P. (2025). Scoring the Ethics of AI Robo-Advice: Why We Need Gateways and Ratings. Journal of Business Ethics, 198(1), 21–33. Scopus. https://doi.org/10.1007/s10551-024-05753-5

Koushal, H., Kaur, R., & Kaur, C. (2025). The relative review of machine learning in natural language processing (NLP) and Information Technology. https://ideas.repec.org/a/jbh/ijsrcs/v11y2025i2id1075.

Launingtia, I., Suandi, I., & ... (2025). Integration of NLP (Natural Language Processing)-Based Technology in Japanese Language Learning. Journal of Practice. http://www.digitalpress.gaes-edu.com/index.php/jpled article/view/551

Masri, M., Judijanto, L., Harto, B., Ohyver, D., & ... (2025). AI dan Ekonomi Berbasis Data: Solusi Inovatif untuk Pengambilan Keputusan Ekonomi oleh Entrepreneur.

Muchtar, E. (2019). Proses Screening Saham Syariah (Perspektif Akademisi dan Praktisi Ekonomi Syariah). Ad-Deenar: Jurnal Ekonomi. https://jurnal.staialhidayahbogor.ac.id/index.php/ad/article/view/534

Novita, D., Putra, H. M., Cahyanti, I. S., Sukarnoto, T., Riyadi, H. A., & Daqamseh, W. N. N. (2026). Contemporary Eco-Maqashid Governance and Circular Economy in Indonesia’s Islamic Capital Market: Addressing the “Islamic but Not Green” Paradox. MILRev: Metro Islamic Law Review, 5(2),1489–1516. Scopus. https://doi.org/10.32332/milrev.v5i2.12673

Noviyanti, R. (2016). Lembaga Pengawas Hisbah dan Relevansinya pada Dewan Syariah Nasional (DSN) dan Dewan Pengawas Syariah (DPS) di Perbankan Syariah Indonesia. Millah: Jurnal Studi Agama, 15(1), 29-50.

Oktaviani, F. (2021). Analysis Of Islamic Law On The Requirements Of A Maximum Of 10% Of Non-Halal Income In The Issuance Of The Sharia Securities. JIL: Journal of Indonesian Law. https://scholar.archive.org/work/dpgv5omnpncp7altcjyzocws6i/access/wayback/https://ejournal.iainsalatiga.ac.id/index.php/jil/article/download/5822/pdf

Rohim, A. N. (2022). Dharurah and the Realization of Maqashid Sharia: Analysis of the Implementation of Islamic Legal Maxims on Emergency. Nurani, 22(1), 63–80. Scopus. https://doi.org/10.19109nurani.v22i1.11449

Ryandono, M. N. H., Widiastuti, T., Mawardi, I., Al Mustofa, M. U., Robani, A., Fanani, S., Dewi, E. P., Atiya,

N., Rusanti, E., & Nisa’, M. (2024). Constructing an Environmental, Social, And Governance (ESG) Index for Islamic Social Finance Institutions: Empirical Investigation from Indonesia. Journal of Ecohumanism, 3(4), 2620–2645. Scopus. https://doi.org/10.62754/joe.v3i4.3781

Sadhana, S., Velavan, M., Sowmiya, R., Thirumal Azhagan, C., & Paramasivam, D. (2026). Algorithmic Decomposition of ESG Scores: A Sustainability Governance Analysis of Indian Listed Companies. 773–777. Scopus. https://doi.org/10.1109/CSNT69054.2026.11502124

Saivasan, R. (2024). Robo-Advisory and Investor Trust: The Essential Role of Ethical Practices and Fiduciary Responsibility. The Adoption of Fintech Using Technology for Better Security, Speed, and Customer Experience in Finance, 84–97. Scopus. https://doi.org/10.4324/9781032644165-6

Schnebel, E. (2024). Ethical issues of Digital Finance: What is changing by Digital Finance? What are social

implications? How do we develop it ethically? The Elgar Companion to Applied AI Ethics, https://www.elgaronline.com/edcollchap/book/9781803928241/bookpart-9781803928241-18.xml

Sharma, M., Gupta, S., & Kumar, M. T. (2026). Incorporating Compliance, Ethics, and Advanced Algorithms in

Robo-Advisors: A Comprehensive, Multidimensional Analysis. Recent Trends in AI and Data Science, 107–127. Scopus. https://doi.org/10.1201/9781003635178-11

Trivedi, S., & Dzingirai, M. (2026). The Evolution of Finance and the Rise of AI. The Future of Money, Investments, and Financial Services: A Roadmap Powered by AI and Other Technologies, 25–38. Scopus.

Umam, K. (2012). Legislasi Fikih Ekonomi Perbankan: Sinkronisasi Peran Dewan Syariah Nasional dan Komite

Perbankan Syariah. Mimbar Hukum-Fakultas Hukum Universitas Gadjah Mada, 24(2), 357-375.

Ummah, H., Sonjaya, A., & Jamaludin, J. (2024). Sharia fintech: Crowdfunding as MSMEs financing. Al Muamalat: Jurnal Ekonomi. https://www.academia.edu/download/118627356/10664.pdf

Wichianrak, J., Khan, T., Teh, D., & Dellaportas, S. (2023). Critical Perspectives of NGOs on Voluntary Corporate Environmental Reporting: Thai Public Listed Companies. Sustainability (Switzerland), 15(7). Scopus. https://doi.org/10.3390/su15076195

Zafar, M. B., & Ali, H. (2026). Shariah governance standard on generative AI for Islamic financial institutions. Journal of Islamic Accounting and Business Research, 1–27. Scopus. https://doi.org/10.1108/JIABR 03-2025-0141

Zed, M. (2014). Metode Penelitian Kepustakaan. Jakarta: Yayasan Pustaka Obor Indonesia.

Zulkepli, M. I. S., Safwan Harun, M., Ikhlas Rosele, M., Norazelan, S. H., & Mohd Azhar, M. H. (2026). Artificial Intelligence In Islamic Finance: An Outlook Based On Maqasid Al-Shariah. Journal of Fatwa Management and Research, 31(2), 304–335. Scopus. https://doi.org/10.33102/jfatwa.vol31no2.780