IDEAS home Printed from https://ideas.repec.org/h/elg/eechap/16009_16.html
   My bibliography  Save this book chapter

The Islamic debate on derivatives

In: Handbook on Islam and Economic Life

Author

Listed:
  • Andreas A. Jobst

Abstract

Despite their demonstrable importance for financial sector development, derivatives are few and far between in countries where capital market transactions are governed by Islamic law (shari’ah). This chapter explores the validity of the risk shifting proposition of derivatives in accordance with fundamental legal principles of the shari’ah and summarizes the key issues related to the prohibition of excessive uncertainty (gharar), speculative behavior (maisir) and unilateral enrichment without the creation of real values under Islamic jurisprudence (fiqh al-muamalat) which have circumscribed the use of derivatives. The chapter also presents a classification scheme of existing shari’ah-compliant derivatives, whose characteristics inform general axioms for the permissibility of certain types of contracts.

Suggested Citation

  • Andreas A. Jobst, 2014. "The Islamic debate on derivatives," Chapters, in: M. Kabir Hassan & Mervyn K. Lewis (ed.), Handbook on Islam and Economic Life, chapter 16, pages iii-iii, Edward Elgar Publishing.
  • Handle: RePEc:elg:eechap:16009_16
    as

    Download full text from publisher

    File URL: https://www.elgaronline.com/view/9781783479818.00025.xml
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Andreas Jobst & Peter Kunzel & Paul Mills & Amadou Sy, 2008. "Islamic bond issuance: what sovereign debt managers need to know," International Journal of Islamic and Middle Eastern Finance and Management, Emerald Group Publishing Limited, vol. 1(4), pages 330-344, November.
    2. Andreas Jobst, 2007. "The Economics of Islamic Finance and Securitization," IMF Working Papers 2007/117, International Monetary Fund.
    3. Bacha, Obiyathulla I., 1999. "Derivative Instruments and Islamic Finance: Some Thoughts for a Reconsideration," MPRA Paper 12752, University Library of Munich, Germany.
    4. Mr. Juan Sole & Andreas Jobst, 2012. "Operative Principles of Islamic Derivatives: Towards a Coherent Theory," IMF Working Papers 2012/063, International Monetary Fund.
    5. Andreas A. Jobst, 2009. "Islamic derivatives," International Journal of Monetary Economics and Finance, Inderscience Enterprises Ltd, vol. 2(3/4), pages 254-260.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Mr. Juan Sole & Andreas Jobst, 2012. "Operative Principles of Islamic Derivatives: Towards a Coherent Theory," IMF Working Papers 2012/063, International Monetary Fund.
    2. Godlewski, Christophe J. & Turk-Ariss, Rima & Weill, Laurent, 2013. "Sukuk vs. conventional bonds: A stock market perspective," Journal of Comparative Economics, Elsevier, vol. 41(3), pages 745-761.
    3. Giorgio Gomel & Angelo Cicogna & Domenico De Falco & Marco Valerio Della Penna & Lorenzo Di Bona De Sarzana & Angela Di Maria & Patrizia Di Natale & Alessandra Freni & Sergio Masciantonio & Giacomo Od, 2010. "Islamic finance and conventional financial systems. Market trends, supervisory perspectives and implications for central banking activity," Questioni di Economia e Finanza (Occasional Papers) 73, Bank of Italy, Economic Research and International Relations Area.
    4. Ehab M. M. INJADAT, 2014. "Futures and Forwards Contracts from Perspective of Islamic Law," Journal of Economics and Political Economy, KSP Journals, vol. 1(2), pages 241-252, December.
    5. Sweder van Wijnbergen & Sajjad Zaheer, 2013. "Sukuk Defaults: On Distress Resolution in Islamic Finance," Tinbergen Institute Discussion Papers 13-087/VI/DSF57, Tinbergen Institute.
    6. Injadat, Ehab M. M., 2014. "Futures and Forwards Contracts from Perspective of Islamic Law," EconStor Open Access Articles and Book Chapters, ZBW - Leibniz Information Centre for Economics, vol. 1(2), pages 241-252.
    7. jallow, ousman & Joof, Foday, 2020. "Investigating the Asymmetric Effect of Sukuk Returns on Economic Growth - Evidence from Indonesia, a NARDL Perspective," MPRA Paper 102939, University Library of Munich, Germany.
    8. Saeed, Momna & Elnahass, Marwa & Izzeldin, Marwan & Tsionas, Mike, 2021. "Yield spread determinants of sukuk and conventional bonds," Economic Modelling, Elsevier, vol. 105(C).
    9. Sandrine Kablan & Ouidad Yousfi, 2015. "Performance of Islamic Banks across the World: An Empirical Analysis over the Period 2001-2008," International Journal of Empirical Finance, Research Academy of Social Sciences, vol. 4(1), pages 27-46.
    10. Baele, Lieven & Farooq, Moazzam & Ongena, Steven, 2014. "Of religion and redemption: Evidence from default on Islamic loans," Journal of Banking & Finance, Elsevier, vol. 44(C), pages 141-159.
    11. Nadhirah Nordin & Normadiah Daud & Mahadi Mohammad & Hashim Jusoh & Mohd Shukri Jusoh & Faizol Ismail, 2017. "Commodity Derivatives: Shariah Alternatives in Risk Management?," International Journal of Academic Research in Business and Social Sciences, Human Resource Management Academic Research Society, International Journal of Academic Research in Business and Social Sciences, vol. 7(4), pages 232-246, April.
    12. Abdelsalam, Omneya & Elnahass, Marwa & Ahmed, Habib & Williams, Julian, 2022. "Asset securitizations and bank stability: Evidence from different banking systems," Global Finance Journal, Elsevier, vol. 51(C).
    13. repec:ipg:wpaper:2014-448 is not listed on IDEAS
    14. Baele, L. & Farooq, M. & Ongena, S., 2012. "Of Religion and Redemption : Evidence from Default on Islamic Loans (Replaces CentER DP 2010-136)," Discussion Paper 2012-014, Tilburg University, Center for Economic Research.
    15. Komijani, Akbar & Taghizadeh-Hesary, Farhad, 2018. "An Overview of Islamic Banking and Finance in Asia," ADBI Working Papers 853, Asian Development Bank Institute.
    16. Kablan, S & Yousfi, O, 2011. "Efficiency of islamic and conventional banks in countries with islamic banking," MPRA Paper 32951, University Library of Munich, Germany.
    17. Houcem Smaou & Hatem Ghouma, 2019. "Sukuk Market Development and Islamic Banks’ Capital Ratios," Working Papers 1329, Economic Research Forum, revised 21 Aug 2019.
    18. Martin Čihák & Heiko Hesse, 2010. "Islamic Banks and Financial Stability: An Empirical Analysis," Journal of Financial Services Research, Springer;Western Finance Association, vol. 38(2), pages 95-113, December.
    19. Abdul Halim, Zairihan & Zakaria, Nadisah & Zakaria, Roza Hazli & Samsudin, Hazman, 2018. "Arrangers’ Identity and the Syndicate Structure of Sukuk," Jurnal Ekonomi Malaysia, Faculty of Economics and Business, Universiti Kebangsaan Malaysia, vol. 52(1), pages 243-256.
    20. Mesbahi Moghadam , Gholamreza & Asadi , Gholamhosein & Sajadi , Seyed Ali, 2015. "Conceptual Model of Islamic Commercial Paper for Banks and Credit Institutions on the Basis of Murabaha Sukuk," Journal of Money and Economy, Monetary and Banking Research Institute, Central Bank of the Islamic Republic of Iran, vol. 10(3), pages 73-85, July.
    21. Mumtaz Hussain & Asghar Shahmoradi & Rima Turk, 2016. "An Overview of Islamic Finance," Journal of International Commerce, Economics and Policy (JICEP), World Scientific Publishing Co. Pte. Ltd., vol. 7(01), pages 1-28, February.

    More about this item

    Keywords

    Asian Studies; Economics and Finance;

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:elg:eechap:16009_16. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Darrel McCalla (email available below). General contact details of provider: http://www.e-elgar.com .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.