ChatGPT is a language model developed by OpenAI, which is trained on a large corpus of text data from the internet. It uses state-of-the-art machine learning techniques, such as deep learning and transformers, to generate human-like text in response to user prompts.

Together with other advanced language models, ChatGPT will significantly impact various industries and applications, such as customer service, content generation, and language translation. They are helping to drive innovation and advances in the field of artificial intelligence and shaping how humans interact with technology.

In this article, we’ll introduce how to use ChatGPT for Islamic Finance and Shariah Compliance related topics. The first step is ensuring it understands key concepts like Islamic Finance, Shariah compliance, AAOIFI, etc. we also let ChatGPT suggest how GPT models can benefit Islamic Finance. Based on those I guided ChatGPT to do Shariah-compliant business screening. Overall it is satisfying. Although it classifies traditional financial services as permissible, given some guidance, it can quickly adjust and generalize.

The results look promising, which encourages us to move further. For the next step, we will leverage OpenAI API to fine-tune the GPT model and customize it to be an Islamic Finance Advisor. We will open a repository for this project soon on my GitHub: https://github.com/BilalBAI

With more training and fine-tuning, we believe GPT models are capable to perform financial analysis in general.

Below is our first experimental conversation with ChatGPT:

TYC FINANCE: Please follow my instructions closely. Answer questions directly and clearly. Make the answers brief and concise. Don’t repeat what has been said. Do you understand?

ChatGPT: Yes, I understand.

TYC FINANCE: Explain Islamic Finance.

ChatGPT: Islamic finance is a financial system based on Islamic law (Sharia) that prohibits the charging and paying of interest (riba) and gambling (maysir). Instead, it focuses on profit and loss sharing, asset-based financing and risk sharing between parties. The ultimate goal is to promote ethical and socially responsible investments that align with the principles of fairness, justice and ethical behavior in commerce.

TYC FINANCE: Explain Shariah compliant investment.

ChatGPT: Shariah-compliant investment is an investment that adheres to Islamic law (Shariah) principles and ethical guidelines. This type of investment prohibits the involvement in industries or activities considered harmful to society or against the principles of Islam, such as gambling, alcohol, tobacco, and speculative financial practices. Instead, it emphasizes investments in sectors that promote social welfare and economic development, such as healthcare, education, and renewable energy. The goal of Shariah-compliant investment is to generate profit while following ethical and religious principles.

TYC FINANCE: Introduce GPT models to Islamic investors and Islamic Finance stakeholders. Explain what is GPT and how can GPT benefits them.

ChatGPT: GPT (Generative Pretrained Transformer) is a deep learning model developed by OpenAI that has been trained on a large corpus of text data to generate human-like responses. The GPT model can be fine-tuned for various applications, including language translation, question-answering, and text generation.

For Islamic finance stakeholders and investors, GPT can provide benefits in several ways:

Knowledge base: GPT can serve as a virtual assistant, providing information and answers to questions about Islamic finance, Shariah compliance, and related topics in a fast and accurate manner.

Contract analysis: GPT can be trained to analyze financial contracts, such as sukuk and other Islamic financial instruments, to ensure compliance with Shariah rules and regulations.

Market analysis: GPT can be used to analyze market trends and provide insights into potential investment opportunities in the Islamic finance sector.

Automation: GPT can help automate repetitive and time-consuming tasks, such as contract review and compliance check, freeing up valuable time and resources for Islamic finance professionals.

Overall, GPT has the potential to bring efficiency, accuracy, and innovation to the Islamic finance sector, supporting the growth and development of this important industry.

TYC FINANCE: What is AAOIFI standard?

ChatGPT: AAOIFI stands for Accounting and Auditing Organization for Islamic Financial Institutions. It is an independent, international, not-for-profit organization that was established to promote and develop a uniform system of accounting, auditing, governance, ethics, and standards for Islamic financial institutions worldwide. AAOIFI’s standards provide a framework for the operation and regulation of Islamic financial institutions, including banks, investment companies, and insurance companies. These standards aim to ensure that Islamic financial products and services are managed in a transparent, fair, and ethical manner, and to promote public confidence in the Islamic finance industry.

TYC FINANCE: Explain AAOIFI standards for financial paper ( shares and bonds).

ChatGPT: AAOIFI provides standards for the issuance and management of financial papers such as shares and bonds in the Islamic finance industry. These standards aim to ensure that such financial instruments are structured in a manner that is consistent with the principles of Islamic law (Shariah) and promote ethical and transparent financial practices.

For shares, AAOIFI standards require that they be issued based on a profit and loss sharing mechanism, where the company shares its profits with its shareholders in proportion to their ownership. Additionally, these standards prohibit any form of guaranteed returns and require that shares be freely transferable.

For bonds, AAOIFI standards require that they be structured as asset-based securities rather than debt-based securities, as the charging and paying of interest is prohibited under Islamic law. Instead, bonds are structured as profit and loss sharing instruments, where the return is based on the performance of the underlying assets.

Overall, AAOIFI standards for financial papers provide guidance for the issuance and management of these instruments in a manner that is consistent with Islamic principles and promote ethical financial practices.

TYC FINANCE: Now, let’s conduct Shariah-compliant business screening. When I name a listed company, you will first list all the business lines the company is involved and comment on if they are permissible, not-permissible or concerning according to Shariah rules. Do you understand?

ChatGPT: Yes, I understand. Please go ahead and name a company.

TYC FINANCE: Apple（苹果）

ChatGPT: Apple is involved in several business lines, including but not limited to: technology hardware and software, consumer electronics, online services, and retail.

Technology hardware and software: This business line generally involves the development and sale of computer hardware and software products, including personal computers, smartphones, and other electronic devices. From a Shariah perspective, this business line is generally permissible as long as the products and services provided do not involve or promote activities that are considered harmful or prohibited by Islamic law.

Consumer electronics: This business line involves the sale of various consumer electronics products, including but not limited to smartphones, tablets, and smartwatches. From a Shariah perspective, this business line is generally permissible as long as the products and services provided do not involve or promote activities that are considered harmful or prohibited by Islamic law.

Online services: This business line involves the provision of various online services, including but not limited to the App Store, Apple Music, and iCloud. From a Shariah perspective, this business line is generally permissible as long as the services provided do not involve or promote activities that are considered harmful or prohibited by Islamic law.

Retail: This business line involves the operation of retail stores that sell Apple products. From a Shariah perspective, this business line is generally permissible.

In conclusion, based on the available information, Apple’s business lines are generally permissible from a Shariah perspective, as long as they do not involve or promote activities that are considered harmful or prohibited by Islamic law. However, it’s important to note that Shariah compliance assessments can be complex and may require a detailed analysis of the company’s operations and financial practices.

TYC FINANCE: Budweiser（百威）

ChatGPT: Budweiser is primarily involved in the brewing and sale of beer.

From a Shariah perspective, the production and sale of alcohol is generally considered not-permissible as it is considered a harmful substance in Islam. Additionally, the consumption of alcohol is also prohibited in Islam.

Therefore, from a Shariah perspective, Budweiser’s business line is considered not-permissible.

TYC FINANCE: The Hong Kong and China Gas Company（香港中华煤气）

ChatGPT: The Hong Kong and China Gas Company Limited, commonly known as Towngas, is involved in several business lines, including but not limited to: natural gas distribution and supply, energy-related businesses, and engineering services.

Natural gas distribution and supply: This business line involves the distribution and supply of natural gas to residential, commercial, and industrial customers. From a Shariah perspective, this business line is generally permissible as it does not involve activities that are considered harmful or prohibited by Islamic law.

Energy-related businesses: This business line involves the development and operation of energy-related businesses, including but not limited to power generation and distribution, and energy engineering services. From a Shariah perspective, this business line is generally permissible as long as the energy sources used are sustainable and environmentally-friendly and do not involve or promote activities that are considered harmful or prohibited by Islamic law.

Engineering services: This business line involves the provision of various engineering services, including but not limited to project management, design, and construction. From a Shariah perspective, this business line is generally permissible as long as the services provided do not involve or promote activities that are considered harmful or prohibited by Islamic law.

In conclusion, the business lines of The Hong Kong and China Gas Company are mainly permissible from a Shariah perspective, with the exception of any business activities that may involve or promote activities that are considered harmful or prohibited by Islamic law.

TYC FINANCE: Galaxy Entertainment(银河娱乐)

ChatGPT: Galaxy Entertainment is primarily involved in the development and operation of casinos and gaming facilities.

From a Shariah perspective, gambling and games of chance are generally considered not-permissible as they involve taking risks and engaging in speculative behavior, which goes against the principles of Islamic finance.

Therefore, from a Shariah perspective, Galaxy Entertainment’s business line is considered not-permissible.

TYC FINANCE: Tencent（腾讯）

ChatGPT: Tencent is involved in several business lines, including but not limited to: technology services, online gaming, social media, and fintech.

Technology services: This business line involves the provision of various technology services, including but not limited to cloud computing and artificial intelligence. From a Shariah perspective, this business line is generally permissible as long as the services provided do not involve or promote activities that are considered harmful or prohibited by Islamic law.

Online gaming: This business line involves the development and operation of online games and gaming platforms. From a Shariah perspective, this business line is generally not-permissible as many online games involve gambling and games of chance, which are prohibited in Islam.

Social media: This business line involves the operation of various social media platforms, including but not limited to WeChat and QQ. From a Shariah perspective, this business line is generally permissible as long as the platforms do not involve or promote activities that are considered harmful or prohibited by Islamic law.

Fintech: This business line involves the development and operation of financial technology products and services, including but not limited to mobile payments and wealth management. From a Shariah perspective, this business line is generally permissible as long as the products and services provided do not involve or promote activities that are considered harmful or prohibited by Islamic law.

In conclusion, Tencent’s business lines are a mixture of permissible and not-permissible from a Shariah perspective. The permissibility of Tencent’s business activities will depend on the specific products and services provided and whether or not they involve or promote activities that are considered harmful or prohibited by Islamic law.

TYC FINANCE: Alibaba（阿里巴巴）

ChatGPT: Alibaba is involved in several business lines, including but not limited to: e-commerce, cloud computing, artificial intelligence, and digital media and entertainment.

E-commerce: This business line involves the operation of various e-commerce platforms, including but not limited to Alibaba.com and Taobao. From a Shariah perspective, this business line is generally permissible as long as the products and services provided do not involve or promote activities that are considered harmful or prohibited by Islamic law.

Cloud computing: This business line involves the provision of cloud computing services, including but not limited to data storage and processing. From a Shariah perspective, this business line is generally permissible as long as the services provided do not involve or promote activities that are considered harmful or prohibited by Islamic law.

Artificial Intelligence: This business line involves the development and deployment of artificial intelligence products and services. From a Shariah perspective, this business line is generally permissible as long as the products and services provided do not involve or promote activities that are considered harmful or prohibited by Islamic law.

Digital media and entertainment: This business line involves the operation of various digital media and entertainment platforms, including but not limited to Alibaba Music and Alibaba Pictures. From a Shariah perspective, this business line is generally permissible as long as the platforms do not involve or promote activities that are considered harmful or prohibited by Islamic law.

In conclusion, Alibaba’s business lines are generally considered permissible from a Shariah perspective, as long as they do not involve or promote activities that are considered harmful or prohibited by Islamic law. However, it’s important to note that Shariah compliance assessments can be complex and may require a detailed analysis of the company’s operations and financial practices.

TYC FINANCE: Evergrande (恒大)

ChatGPT: Evergrande is involved in several business lines, including but not limited to: real estate development and investment, financial services, and clean energy.

Real estate development and investment: This business line involves the development and sale of real estate properties, including residential and commercial properties. From a Shariah perspective, this business line is generally permissible as long as the properties being developed and sold do not involve or promote activities that are considered harmful or prohibited by Islamic law.

Financial services: This business line involves the provision of various financial services, including but not limited to wealth management and loan services. From a Shariah perspective, this business line is generally permissible as long as the services provided do not involve or promote activities that are considered harmful or prohibited by Islamic law.

Clean energy: This business line involves the development and operation of clean energy projects, including but not limited to wind and solar power. From a Shariah perspective, this business line is generally permissible as it promotes sustainable and environmentally-friendly practices.

In conclusion, Evergrande’s business lines are a mixture of permissible and concerning from a Shariah perspective. The permissibility of Evergrande’s business activities will depend on the specific products and services provided and whether or not they involve or promote activities that are considered harmful or prohibited by Islamic law.

It’s important to note that Shariah compliance assessments can be complex and may require a detailed analysis of the company’s operations and financial practices.

TYC FINANCE: For any financial services, always consider it as concerning but not permissible unless it is an Islamic financial institution. Do you understand?

ChatGPT: Yes, I understand. Financial services provided by non-Islamic financial institutions are considered concerning from a Shariah perspective unless the services are specifically offered by an Islamic financial institution that adheres to Shariah principles.

TYC FINANCE: Good. Now comment on Evergrande again.

ChatGPT: Evergrande’s financial services business line is concerning from a Shariah perspective as it is not specifically offered by an Islamic financial institution that adheres to Shariah principles.

TYC FINANCE: Bank of China（中国银行）

ChatGPT: Bank of China is a conventional financial institution that offers various financial services, including but not limited to: retail banking, corporate banking, investment banking, and wealth management.

From a Shariah perspective, the financial services offered by Bank of China are concerning as they are not specifically offered by an Islamic financial institution that adheres to Shariah principles. This is because conventional financial institutions typically offer interest-based products and services, which are not permissible under Shariah law.

It’s important to note that Shariah compliance assessments can be complex and may require a detailed analysis of the company’s operations and financial practices.