Table of Contents

Handbook on Islam and Economic Life

Handbook on Islam and Economic Life

Edited by M. Kabir Hassan and Mervyn K. Lewis

Handbook on Islam and Economic Life is a unique study, one of the first of its kind to consider Islam within a broader economic sphere. Covering a wide breadth of topics and research, it explores how Islam impinges upon and seeks to shape major aspects of economic life including economic organisation, business and management, finance and investment, charity, mutuality and self-help, and government. It concludes by analysing the link between religion and development, the present economic situation in Arab countries and the causes of underdevelopment in Muslim countries.

Chapter 16: The Islamic debate on derivatives

Andreas A. Jobst

Subjects: asian studies, asian economics, economics and finance, asian economics, islamic economics and finance


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.

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