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FINANCIAL DERIVATIVES HEDGING A REVIEW OF ISLAMIC FINANCE AT CROSS ROADS

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13 Pages : 157-167

http://dx.doi.org/10.31703/ger.2022(VII-I).13      10.31703/ger.2022(VII-I).13      Published : Mar 2022

Financial Derivatives Hedging: A Review of Islamic Finance at Cross Roads

Abstract

    Principles of Islam advocate risk distribution and prohibit speculative activities. Therefore, financial derivatives under Islamic Sharia would achieve hedging in the true sense and could be applied more effectively to reduce risks and speculation. With the increased complexities of financial capital markets, effective financial instruments are required and Islamic financial derivatives may be the answer to averting a similar global financial crisis in the future. Based on various schools of thought and fiqh in Islam, we provide a critique of Islamic Sharia tenets in relation to conventional derivative instruments. We also illustrate how conventional financial derivatives may be integrated into Islamic finance an existing model. The key challenge for Islamic finance is agreement on a universal set of Islamic laws, regulations and principles that are acceptable across all the sects of Islam. As it is there is a non-consolidation of fatwas and a lack of a common Islamic jurisprudence.Our review highlights that the problem lies in the non-acceptance of a universally acceptable Islamic conceptual framework and not in the lack of financial engineering capability.

    Derivatives, Islamic Finance, Financial Markets, Shariah, Hedging, Futures, Options

    (1) Rubeena Tashfeen
    Associate Professor, Faculty of Management Sciences, University of Central Punjab, Lahore, Punjab, Pakistan.
    (2) Muhammad Mahmood Shah Khan
    Assistant Professor, Hasan Murad School of Management, University of Management and Technology, Lahore, Punjab, Pakistan.
    (3) Sheikh Khurram Abid
    The University Of Lahore, Punjab, Pakistan.
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Cite this article

APA

    APA : Tashfeen, R., Khan, M. M. S., & Abid, S. K. (2022). Financial Derivatives Hedging: A Review of Islamic Finance at Cross Roads. Global Economics Review, VII(I), 157-167. https://doi.org/10.31703/ger.2022(VII-I).13

CHICAGO

    CHICAGO : Tashfeen, Rubeena, Muhammad Mahmood Shah Khan, and Sheikh Khurram Abid. 2022. "Financial Derivatives Hedging: A Review of Islamic Finance at Cross Roads." Global Economics Review, VII (I): 157-167 doi: 10.31703/ger.2022(VII-I).13

HARVARD

    HARVARD : TASHFEEN, R., KHAN, M. M. S. & ABID, S. K. 2022. Financial Derivatives Hedging: A Review of Islamic Finance at Cross Roads. Global Economics Review, VII, 157-167.

MHRA

    MHRA : Tashfeen, Rubeena, Muhammad Mahmood Shah Khan, and Sheikh Khurram Abid. 2022. "Financial Derivatives Hedging: A Review of Islamic Finance at Cross Roads." Global Economics Review, VII: 157-167

MLA

    MLA : Tashfeen, Rubeena, Muhammad Mahmood Shah Khan, and Sheikh Khurram Abid. "Financial Derivatives Hedging: A Review of Islamic Finance at Cross Roads." Global Economics Review, VII.I (2022): 157-167 Print.

OXFORD

    OXFORD : Tashfeen, Rubeena, Khan, Muhammad Mahmood Shah, and Abid, Sheikh Khurram (2022), "Financial Derivatives Hedging: A Review of Islamic Finance at Cross Roads", Global Economics Review, VII (I), 157-167

TURABIAN

    TURABIAN : Tashfeen, Rubeena, Muhammad Mahmood Shah Khan, and Sheikh Khurram Abid. "Financial Derivatives Hedging: A Review of Islamic Finance at Cross Roads." Global Economics Review VII, no. I (2022): 157-167. https://doi.org/10.31703/ger.2022(VII-I).13