An Introduction to Islamic Finance: Theory and Practice

110 AN INTRODUCTION TO ISLAMIC FINANCE monitoring and transaction costs; (iii) the infl ow of vast amounts of gold and other ric ...

Risk Sharing as an Alternative to Debt 111 livelihood. It is, therefore, welfare enhancing to reduce risks to income and lower t ...

112 AN INTRODUCTION TO ISLAMIC FINANCE See Reinhart and Rogoff (2009). For a full discussion of Islamic fi nancial instruments, ...

113 CHAPTER 6 The Islamic Financial System T he primary role of a fi nancial system is to create incentives for an effi cient al ...

114 AN INTRODUCTION TO ISLAMIC FINANCE is not as simple and straightforward as it may seem. The form of fi nancial intermediatio ...

The Islamic Financial System 115 any one individual. They also allow individual households to participate in investments that re ...

116 AN INTRODUCTION TO ISLAMIC FINANCE infrastructure. This section discusses the theoretical design of the banking - style fi n ...

The Islamic Financial System 117 referred to as the “two - tier mudarabah” model, while the second model is known as the “two - ...

118 AN INTRODUCTION TO ISLAMIC FINANCE for the demand deposits but stipulates no reserve requirement for the sec- ond window. Th ...

The Islamic Financial System 119 murabahah, ijarah, istisna’, mudarabah and musharakah investments on their assets side. The ban ...

120 AN INTRODUCTION TO ISLAMIC FINANCE dominate the conventional capital markets and debt is considered the major source of exte ...

The Islamic Financial System 121 If we assert that Islamic fi nance is all about risk sharing, then the best instrument for this ...

122 AN INTRODUCTION TO ISLAMIC FINANCE recognized that requiring such a market is unrealistic: “Clearly, the con- tingent commod ...

The Islamic Financial System 123 ■ (^) It demonstrates that stock markets can be used as a tool of risk and fi nancial managemen ...

124 AN INTRODUCTION TO ISLAMIC FINANCE worthwhile considering the positive contributions the instrument would make to the econom ...

The Islamic Financial System 125 guarantor and to the risk to the underlying asset’s returns and risks; or, in other words, the ...

126 AN INTRODUCTION TO ISLAMIC FINANCE which can qualify to be pooled together and the holders of these assets may desire to sel ...

The Islamic Financial System 127 of the security will depend on the expected market value of the asset at the time of maturity o ...

128 AN INTRODUCTION TO ISLAMIC FINANCE the risk through fl uctuations in the security’s price. The investors will be exposed to ...

The Islamic Financial System 129 The success of an asset - linked securities market will largely depend on the supply and variet ...