The historical contingency of religious normativity

Regional differences in religious opinions are a major issue in Islamic banking. The Islamic contract of bay’ al-‘inah (a sale and repurchase agreement), which was commonly practiced in Malaysia but unacceptable in the Middle East, represents these differences well. This study traces the process by which the legitimacy of bay’ al-‘inah was constituted in Malaysia and examines how actors related the local practice to Islamic tradition. Through interviews and archival research, this study reveals that first adopters of bay’ al-‘inah selected it as an exceptional means for house financing with some ambivalence; however, the choice consequently enabled this contract to prevail through a long-term reproduction process, which obscured the religious dilemma of the first adopters. This study demonstrates the usefulness of process-tracing analysis for anthropological studies of the institutional formation of local Islamic practices to identify their causal configuration and trace the changes of religious normativity and everyday practices.