The market (suq or bazar) has a distinctive place in the history of Islamic civilization. Makkah and Madinah were major trade centers at the time of the advent of Islam, and the prophet was himself an active market participant and reformer. There were famous markets - 'Ukkaz, Majannah, and Dhhu al Majaz - in pre-Islamic Arabia that commonly held fairs during the pilgrimage season. This practice was continued after the appearance of Islam, for when the new Muslims felt that it might be sinful for them to trade in such places (al Zubayli 1984), the following verse was revealed: "There is no sin if you seek the bounty of your Lord (during the pilgrimage)" (Qur'an 2:198)......... Download the full article in pdf attachment (below)
Mohammad Hashim Kamali. Tas'ir (Price Control) in Islamic Law, The American Journal of Islamic Social Sciences, 11, vol 1.
The world experienced two major financial crises within a decade: the currency and stock market crises of 1997-98, and now a crippling recession that began with the US subprime debacle caused by excessive lending to borrowers unable to make repayment. Both originated in 'asset bubbles' and unlimited creation of fiat money that loaded the market with the sale of debts, or bay' al-dayn, as it is known in the jargon of shariah law. Dealining in debts that lacks any asset base overwhelmed the financial system......... Download the full article in pdf attachment (below)
This article begins with the ethical foundations of Islam that are relevant to commercial transactions- much of which strikes a common chord of objectives and values with other major traditions. This is followed by an exposition of the ethical susbtance of Islam in the applied fiqh provisions pertaining to contracts, adn the relevanece aslo of the higher goals and purposes of the shariah (maqasid al-shariah) to the ethical integrity of contracts. This is followed by a discussion of the shariah prohibition and damaging effects of riba. The three remaining sections address the salient characteristics of Islamic commercial law and finance: 1) Islamic finance is characteristically asset-based; 2) it is averse to reliance on debt; and 3) it is also risk-averse. The last segment explains the shariah prohobition of gharar, uncertainty and risk taking in financial transactions......... Download the full article in pdf attachment (below)
Arab Law Quarterly, Vol. 11, (1996), pp 3-33.
The juristic debate over gharar revolves around the question whether it consists mainly of uncertainty over the existence of subject matter of contract or whether gharar basically consists of ignorance of the material attributes of the contract. Some ulema have also suggested that the basic concern in all discussion of gharar is over the elements of risk-taking, gambling, and unlawful appropriation of the property of others. The present essay addresses this question and proceeds to look into the conditions and typology of gharar and issues over the sale of the unseen (bay' al-ma'dum), sale at the market price (bay' bi'-si'r al-suq) and the relevance of gharar to takaful insurance and futures trading in commodities.
IIUM Law Journal, Vol. 7, no. 2 (1999), pp 1-21.
This paper is presented in two parts. Part one is devoted to a discussion of the potential of developing Islamic financial instruemnt in the derivatives market of Malaysia. The second part of this paper addresses the issue of the permissibility or otherwise in Shariah of trading in derivatives. The remaining part of the discussion is issue-oriented and looks into some questions of juristic concern as to the permissibility of trading in derivatives.
IIUM Journal of Economics and Management, Vol. 7, no. 2 (1999), pp 73-86.
If one were to single out an area of derivative trading which can find support in the relevant evidence of Shari'ah, it would unquestionably be the commodity futures. This is because futures and options that derive from commodities, especially agricultural commodities and food grains, can be used for a variety of beneficial purposes. Commodity futures can be used as hedging devices that protect farmers and the food production industry against the price risk over a period of time....
Thunderbird International Business Review (University of Austin, Texas), Vol. 41 (1999), pp 523-540.
ed. by Munawar Iqbal and Tariqullah Khan, Financial Engineering and Islamic Contracts, NY: Palgraves (2005), pp 20-57.
This essay is presented in two parts and several sections. The first part provides a fairly detailed examination of the fiqh rules pertaining to the contract of ijarah. It begins with the definition of ijarah adn reviews the leading schools of Islamic law on the basic conditions and requirements of this contract. This is followed by a review of the two varieties of ijarah known to the market, namely operational lease and financial lease. The discussion proceeds with a review of contractual options (khiyarat) and their relevance to ijarah, liability for loss and insertion of penalty clauses in the ijarah, liability for loss and insertion of penalty clauses in the ijarah, and then the fiqh rules pertaining to the termination of this contract.
The second part deals with sukuk (bonds) on general and the Islamic bonds in particular. It also discusses potential benefits of Islamic bond and their effects on economic development and examines experts' opinion on issues of concern to Islamic bonds that have drawn the attention of commentators. A brief review of some recent issuances of Islamic bonds is followed by a discussion of hybrod assets in the sukuk.
J. of King Abdulaziz University Islamic Economics, Vol. 20 (2007/1428), pp 3-22.
This article presents nine sections, beginning with a statement of issues, followed by a description of the futures contract, and a literature review in the next two sections. This is followed by an analysis of the hadith "sell not what is not with you," a similar analysis of the issue of qabd, a section on the sale of debts, another on risk taking and speculation, and a conclusion.
Thunderbird International Business, Review 49, 3(2007), pp 309-339.
This survey of themes of common interest to the shariah (Islamic law as expounded in the Qur'an and the Sunnah) and common law begins with a note on the relationship between law and ethics, then advances a brief comparison between the shariah and common law, followed by a review of the Qur'an and Sunnah on the ethical grounding of the shariah. After addressing the ethical purpose of Islamic financial institutions in recent decades, [the author] proceeds toward an exploration of corporate governance under common law and the shariah. This is followed by three specialised themes: discharge by fustration, the theory of options, and the application of equity and good faith to contracts in the two legal traditions.
A Comparison Between Shariʿah and Common Law,” in ed. C Marcinkowski Freiburg Studies in Social Anthropology, (2009), pp 243-262.
This essay is presented in two sections. Section one is devoted to a market analysis of options, and section two to a Shariah perspective on options trading. There is no real shortage of information in the operational procedures of options and the various ways in which options are utilized as trading vehicle and hedging and risk-reduction devices. On the other hand, there is a shortage of in-depth information analyzing options trading from the perspectives of the Shariah. The second part of this essay is tentative, in part because certain aspects of the issues need further development and research.
By Mohammad Hashim Kamali
An Analysis of Futures and Options, Cambridge: the Islamic Texts Society, 2000. Reprint by Ilmiah Publishers of Kuala Lumpur, 2002, pp 253.