Can I Work as a Research Analyst for an Investment Bank?
Shafi'i Fiqh
Answered by Shaykh Irshaad Sedick
Question
I would like to know if it is permissible to work as a Research Analyst in alternative investment firms (which include private equity, venture capital, credit, real estate, and hedge funds.) Please guide me on whether working in this role is permissible for all alternative investment firms or only for private equity.
Answer
In the Name of Allah, the Most Merciful and Compassionate. May Allah alleviate our difficulties and guide us to what pleases Him. Amin.
The work you described would be permissible, although it would be best to avoid it, especially given the nature of banks and the involvement of interest.
This would be permitted because your actual work, i.e., being a Research Analyst, is permissible. Still, if you are directly or indirectly involved in usurious transactions, this is unlawful, and Allah knows best.
What Is a Research Analyst?
A research analyst is a skilled expert responsible for crafting comprehensive investigative reports concerning various securities or assets, which can be utilized either within a company or provided to clients. This role goes by different titles, including securities analyst, investment analyst, equity analyst, rating analyst, or, more simply, “analyst.” [Investopedia]
The role of a research analyst encompasses the meticulous investigation, thorough examination, and potential revision of pertinent facts, underlying principles, and established theories. These efforts are directed towards serving the internal needs of a financial institution or catering to the demands of external financial clients. The culmination of an analyst’s work creates reports that delve into the public records of securities from various companies or industries. These reports often culminate in decisive recommendations, such as advising to “buy,” “sell,” or “hold” specific securities. [ibid.]
Lawful and Unlawful Banking
Imam Nawawi declared that Riba (usury) is Haram and one of the major sins, by consensus [Majmu‘, 9:259]
Currently, there exist two types of banking systems: Islamic and Conventional. Islamic banking follows the Shari‘a (Islamic Law), making it a permissible financial institution. On the other hand, Conventional banking primarily deals with interest-based transactions, which goes against the Qur’an and Hadith’s strict warning against Riba.
Severity of Riba in Islam
The Qur’an severely warns against riba (interest), stating that those who engage in riba will not stand on the Day of Resurrection except like the standing of a person beaten by Satan, leading him to insanity. [Quran, 2:275]
Additionally, Sayyiduna ‘Abdullah ibn Salam (Allah be pleased with him) reports that the Prophet (Allah bless him and give him peace) stated that earning one dirham of riba is worse than fornicating thirty-three times. [Tabarani]
Sayyiduna Abdullah ibn Masʿud (Allah be pleased with him) narrates that the Prophet (Allah bless him and give him peace) cursed the one who accepted riba, the one who paid it, the witness to it, and the one who recorded it. [Abu Dawud]
Assistance in Sin
The principle governing the issue in question is based on the Quranic verse:
“And assist one another in righteousness and piety, but do not assist one another in sin and transgression.” [Quran, 5:2]
I pray this is of benefit and that Allah guides us all.
[Shaykh] Irshaad Sedick
Checked and Approved by Shaykh Faraz Rabbani
Shaykh Irshaad Sedick was raised in South Africa in a traditional Muslim family. He graduated from Dar al-Ulum al-Arabiyyah al-Islamiyyah in Strand, Western Cape, under the guidance of the late world-renowned scholar Shaykh Taha Karaan.
Shaykh Irshaad received Ijaza from many luminaries of the Islamic world, including Shaykh Taha Karaan, Mawlana Yusuf Karaan, and Mawlana Abdul Hafeez Makki, among others.
He is the author of the text “The Musnad of Ahmad ibn Hanbal: A Hujjah or not?” He has served as the Director of the Discover Islam Centre and Al Jeem Foundation. For the last five years till present, he has served as the Khatib of Masjid Ar-Rashideen, Mowbray, Cape Town.
Shaykh Irshaad has thirteen years of teaching experience at some of the leading Islamic institutes in Cape Town). He is currently building an Islamic online learning and media platform called ‘Isnad Academy’ and has completed his Master’s degree in the study of Islam at the University of Johannesburg. He has a keen interest in healthy living and fitness.
