|
Post by Sapphire Capital on Oct 30, 2008 23:03:42 GMT 4
Islamic Hedging: Gambling or Risk Management? Saadiah Mohamad Universiti Teknologi MARA, Malaysia August 27, 2008 Islamic Law and Law of the Muslim World Paper No. 08-47 Abstract: Although there is a lack of consensus regarding derivatives and the development of sharia-compliant funds to mimic hedge funds in order to tap the global surplus liquidity especially the Gulf petrodollar, sharia scholars are generally agreeable that hedging is permissible and necessary as a risk management tool. However, there is still considerable debate regarding the kind of instruments that could be sharia-compliant. This paper looks at the main forms of hedging and examines the debate surrounding the use of derivatives in Islamic financial markets. The paper then looks at alternatives for sharia-compliant hedging mechanisms and in particular examines an Islamic financial derivative of Bai Salam that can mimic a short sale in a conventional option, but with potential for becoming a more superior risk management tool. papers.ssrn.com/sol3/Delivery.cfm/SSRN_ID1284437_code915426.pdf?abstractid=1260110&mirid=5
|
|