Analysis of shariah screening criteria for stocks

Shariah screening is a new phenomenon that has emerged as a result of Shariah permission to invest in mixed companies whose core business is Shariah-compliant but engages in illegitimate (Shariah non-compliant) activities and generates illegitimate revenues. There are different examples of Shariah screening activities that examine the level of companies' relationship with Shariah non-compliant content. The differentiation of Shariah screening standards, which are designed to determine the Sharia legitimacy of companies, necessitates an analysis of the principles set out in this context. This study, which includes such an analysis, reveals the problematic points in practice by addressing the process of determining the Shariah screening criteria. In the study, I first discussed the approaches to joint stock companies and stock investments and I determined that the principle of necessity (ḏaruriyyāt) is the basis of the permission given to mixed companies. While the system as a whole should be shaped within the framework of this principle of necessity, the fact that interest (riba) plays a central role in the determination of sectoral and financial screening criteria leads to a deficiency in the analysis, and moreover, the methods followed for the determination of thresholds lead to methodological mistakes. The purification process, which is a complementary element of the screening process, currently serves a superficial function in terms of removing Shariah non-compliant content.