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Theory of Gharar and its interpretation of Risk and Uncertainty from the perspectives of Authentic Hadith and the Holy Quran: A Qualitative Analysis

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  • Waemustafa, Waeibrorheem
  • Sukri, Suriani

Abstract

The inconclusive definition of Gharar as risk and uncertainty can be commonly found in the contemporary literatures. The difference in the meaning of Gharar is generally thought to be due to the difference in the jurisprudence point of views. The current practice is that there is no standard in defining the terms. Hence, this study introduces steps in defining terminology namely; dictionary definition, Arabic linguistic definition and jurisprudence definition. However, the philosophy of risk as stated in the Holy Quran and Hadith differs from the concept of risk in conventional finance. The finding reveals that risk in Islamic banking refers to a wider interpretation covering the concepts gharar. mysir, mukhatarah, al ghunm bil ghurm and al kharajbil daman than the element of uncertainty as in the conventional finance.

Suggested Citation

  • Waemustafa, Waeibrorheem & Sukri, Suriani, 2015. "Theory of Gharar and its interpretation of Risk and Uncertainty from the perspectives of Authentic Hadith and the Holy Quran: A Qualitative Analysis," MPRA Paper 78316, University Library of Munich, Germany, revised 10 Jan 2016.
    • Handle: RePEc:pra:mprapa:78316
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    References listed on IDEAS

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    Cited by:

    1. Azmi, Nurul Najwanie Fatiehah, 2023. "A Study on KPJ Healthcare Sdn Bhd in Malaysia Performance and Its Determinants," MPRA Paper 119810, University Library of Munich, Germany.
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    3. Tan Ke Wen, Carmen, 2023. "Company Performance and Its Determinants: A Study on New Hoong Fatt Holdings Berhad," MPRA Paper 119821, University Library of Munich, Germany.
    4. Azmi, Siti Nor Aisyah, 2023. "Corporate Governance and Its Determinants: A Study of Pharmaniaga Sdn Bhd," MPRA Paper 119806, University Library of Munich, Germany.

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    More about this item

    Keywords

    Gharar; Mukhatarah; Mysir; al ghunm bil ghurm and al kharaj bil daman.;
    All these keywords.

    JEL classification:

    • G00 - Financial Economics - - General - - - General
    • G02 - Financial Economics - - General - - - Behavioral Finance: Underlying Principles
    • G29 - Financial Economics - - Financial Institutions and Services - - - Other
    • G32 - Financial Economics - - Corporate Finance and Governance - - - Financing Policy; Financial Risk and Risk Management; Capital and Ownership Structure; Value of Firms; Goodwill
    • K00 - Law and Economics - - General - - - General (including Data Sources and Description)
    • P4 - Political Economy and Comparative Economic Systems - - Other Economic Systems
    • P40 - Political Economy and Comparative Economic Systems - - Other Economic Systems - - - General
    • P5 - Political Economy and Comparative Economic Systems - - Comparative Economic Systems
    • P51 - Political Economy and Comparative Economic Systems - - Comparative Economic Systems - - - Comparative Analysis of Economic Systems

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