Advanced Search
MyIDEAS: Login to save this paper or follow this series

Operative Principles of Islamic Derivatives


Author Info

  • Juan Sole
  • Andreas Jobst


Derivatives are few and far between in countries where the compatibility of financial transactions with Islamic law requires the development of shari''ah-compliant structures. Islamic finance is governed by the shari''ah, which bans speculation and gambling, and stipulates that income must be derived as profits from the shared generation of goods and services between counterparties rather than interest or a guaranteed return. The paper explains the fundamental legal principles underpinning Islamic finance with a view towards developing a cohesive theory of derivatives subject to shari''ahprinciples. After critically reviewing accepted contracts and the scholastic debate surrounding existing financial innovation in this area, the paper offers an axiomatic perspective on a principle-based permissibility of derivatives under Islamic law.

Download Info

If you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
File URL:
Download Restriction: no

Bibliographic Info

Paper provided by International Monetary Fund in its series IMF Working Papers with number 12/63.

as in new window
Length: 33
Date of creation: 01 Mar 2012
Date of revision:
Handle: RePEc:imf:imfwpa:12/63

Contact details of provider:
Postal: International Monetary Fund, Washington, DC USA
Phone: (202) 623-7000
Fax: (202) 623-4661
Web page:
More information through EDIRC

Order Information:

Related research

Keywords: Financial instruments; Islamic banking; islamic finance; murabaha; hedging; derivative; islamic law; riba; ijara; financial institutions; islamic bank; islamic scholars; fiqh; hadith; financial market; islamic contracts; present value; hedging tools; financial markets; islamic futures; futures contracts; cash flows; hedge; islamic development; islamic principles; derivatives transactions; salam contract; islamic research; islamic jurisprudence; sukuk; derivative instruments; financial services; net present value; ijarah; future value; financial derivatives; financial stability; financial innovation; islamic bond issuance; hedges; salam contracts; commodity hedges; futures trading; contingent valuation; islamic bond; mudaraba; risk-free interest rate; stock price performance; islamic banks; islamic instruments; mudarabah; international financial markets; financial derivative; international capital; bond; islamic studies; stock price; islamic finance industry; riba al-fadl; financial globalization; musharaka; interest rate risk; sale of debt; stock exchange; stock options; discounting; international capital markets; islamic banking activities; permissible mubah; currency mismatch; bay al-dayn; islamic contract; derivatives trading; musharakah; futures market; money market; hedging instruments; islamic economics; money market deposits; islamic economy; derivatives market; financial sector; derivative product; islamic securities; bond issuance; financial intermediation; credit derivatives; financial contracts; commodity futures;

This paper has been announced in the following NEP Reports:


References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
as in new window
  1. Andreas Jobst, 2007. "The Economics of Islamic Finance and Securitization," IMF Working Papers 07/117, International Monetary Fund.
  2. Heiko Hesse & Andreas (Andy) Jobst & Juan Solé, 2008. "Trends and Challenges in Islamic Finance," World Economics, World Economics, Economic & Financial Publishing, 1 Ivory Square, Plantation Wharf, London, United Kingdom, SW11 3UE, World Economics, Economic & Financial Publishing, 1 Ivory Square, Plantation Wharf, London, United Kingdom, SW11 3UE, vol. 9(2), pages 175-193, April.
Full references (including those not matched with items on IDEAS)



This item is not listed on Wikipedia, on a reading list or among the top items on IDEAS.


Access and download statistics


When requesting a correction, please mention this item's handle: RePEc:imf:imfwpa:12/63. See general information about how to correct material in RePEc.

For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Jim Beardow) or (Hassan Zaidi).

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 references are entirely missing, you can add them using this form.

If the full references list an item that is present in RePEc, but the system did not link 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 profile, as there may be some citations waiting for confirmation.

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