This article develops a conceptual framework for ethical decision‐making in Islamic financial institution based on the Islamic methodological approaches on ethics. While making use of the similarities between the scientific method and the Islamic jurisprudence method, a framework is developed by means of argumentation and reasoning to integrate Sharia doctrines with the “plan, do, check and act” (PDCA) cycle as a managerial tool. Using Al‐Raysuni's analysis of Al‐Shatibi's work on maqasid al‐sharia, this article develops a framework to assess the ethical aspects of Islamic financial operations, which is then applied to hypothetical cases. This approach can help overcome the methodological deficiencies in measuring ethical performance in Islamic finance by focusing on the process of ethical decision‐making that leads to the outcomes of organizational behavior beyond legality of contracts. The framework outlines the conditions under which an activity that is considered legal and permissible contractually could lead to outcomes that can make it ethical or unethical.

Australia is a single country continent located at the heart of Oceania surrounded by the Indian and Pacific Oceans. With a population of approx. 25.5 million people (Australian Bureau of Statistics 2020) and a surface area of over 7.6 million km 2 (Australian Government 2020), Australia is one of the world's most sparsely populated countries. Despite the end of the global commodity super-cycle, 1 Australia's economy and its large resources sector continue to perform well. Measured in nominal GDP terms, Australia is the 14th largest national economy and with 28 years of consistent GDP increases (World Bank 2020) the country with the longest period of uninterrupted economic growth in the developed world (Tang 2017). In 2017 2 the Australian economy grew by 2.4%, followed by a growth of 2.9 in 2018 and 1.9 in 2019 (World Bank 2020).The country is one of the largest mixed economies, which is dominated by a service sector that makes up around 66% of the country's GDP and employs 78% of the workforce (World Bank 2020). Other key sectors include mining and