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Towards An Objective Measure Of Gharar In Exchange

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  • AL-SUWAILEM, SAMI

    (Director of the Research Center,)

Abstract

This paper develops a framework for analyzing gharar based on economic aspects of game theory. The framework is consistent with Shari’ah maxims as well as individual gharar transactions widely studied in classical fiqh resources. In addition, the framework brings insights into explaining different fiqhi positions on controversial gharar contracts. When extended to contemporary practices, the measure helps understanding the logic of instrument design, and where violation of Islamic rules exactly lies. The moral, ethical, and social aspects of this framework show the deep consistency between Islamic rules of exchange and general Islamic principles of human behavior.

Suggested Citation

  • Al-Suwailem, Sami, 2000. "Towards An Objective Measure Of Gharar In Exchange," Islamic Economic Studies, The Islamic Research and Training Institute (IRTI), vol. 7, pages 61-102.
    • Handle: RePEc:ris:isecst:0087
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    Cited by:

    1. Hassan Belkacem Ghassan & Abdelkrim Ahmed Guendouz, 2019. "Panel modeling of z-score: evidence from Islamic and conventional Saudi banks," International Journal of Islamic and Middle Eastern Finance and Management, Emerald Group Publishing Limited, vol. 12(3), pages 448-468, July.
    2. Lukman Hanif Arbi, 2021. "A Contract Theory Approach to Islamic Financial Securities with an Application to Diminishing Mushārakah," JRFM, MDPI, vol. 14(1), pages 1-12, January.
    3. Nurul Syazwani Mohd Noor & Abdul Ghafar Ismail & Muhammad Hakimi Mohd. Shafiai, 2018. "Shariah Risk: Its Origin, Definition, and Application in Islamic Finance," SAGE Open, , vol. 8(2), pages 21582440187, April.
    4. Mr. Juan Sole & Andreas Jobst, 2012. "Operative Principles of Islamic Derivatives: Towards a Coherent Theory," IMF Working Papers 2012/063, International Monetary Fund.
    5. Ghassan, Hassan B., 2016. "Re-examining the equation of exchange according to Shariah rationale money," MPRA Paper 91666, University Library of Munich, Germany, revised Jul 2018.

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