An Introduction to Islamic Finance: Theory and Practice

90 AN INTRODUCTION TO ISLAMIC FINANCE Whereas mudarabah and musharakah contracts are critical in credit and capital creation, ot ...

Financial Instruments 91 powers and, therefore, by virtue of the trust that was placed in him, to be liable for any resulting lo ...

92 AN INTRODUCTION TO ISLAMIC FINANCE Credit risk and defaults Since there may not be any tangible assets that can be used as co ...

Financial Instruments 93 offered through amanah contracts, under which a person entrusted with the safe keeping of property who ...

94 AN INTRODUCTION TO ISLAMIC FINANCE asset in order to recover the debt. Where the borrower refuses to do so, the court has the ...

95 APPENDIX B Islamic Instruments: Historical Background T he mercantile communities of the Middle East followed a sophisticated ...

96 AN INTRODUCTION TO ISLAMIC FINANCE During the period referred to as “the age of the commercial revolution” (Lopez 1976), trad ...

Financial Instruments 97 scholars that globalized trade became relevant only after the “rise of the West” in the late fi fteenth ...

98 AN INTRODUCTION TO ISLAMIC FINANCE Abu - Lughod (1989). See Udovitch (1970a), (1970b), (1967a), (1967b). Goitein (1964) refe ...

99 CHAPTER 5 Risk Sharing as an Alternative to Debt Alternative to Debt I slam has long endorsed risk sharing as the preferred o ...

100 AN INTRODUCTION TO ISLAMIC FINANCE up with uncertainty. Facing an unknown and generally unknowable future, individuals make ...

Risk Sharing as an Alternative to Debt 101 of the Creator. All actions are risky because the full spectrum of future con- sequen ...

102 AN INTRODUCTION TO ISLAMIC FINANCE economic circumstances and its vulnerability to shocks. How well the economy is able to a ...

Risk Sharing as an Alternative to Debt 103 commits to deliver a product in the future against payments today. There are a number ...

104 AN INTRODUCTION TO ISLAMIC FINANCE 35: 29–30; and 61:10–13), that there is a major difference between contracts of exchange ...

Risk Sharing as an Alternative to Debt 105 and informational issues. Agency issues arise because of asymmetric infor- mation bet ...

106 AN INTRODUCTION TO ISLAMIC FINANCE dramatically in the run - up to the recent fi nancial crisis (see Askari et al. 2010; She ...

Risk Sharing as an Alternative to Debt 107 In this situation, Presley and Sessions show that a profi t / loss (muda- rabah) cont ...

108 AN INTRODUCTION TO ISLAMIC FINANCE contingencies. What is missing here is the element of mutuality. Each poli- cyholder deal ...

Risk Sharing as an Alternative to Debt 109 HISTORY OF SHARING RISK IN ISLAM Islamic fi nance based on the sharing of risk has ha ...