Replication of short selling In Islamic finance

Hasan, Aznan and Khan, Sarfaraj (2015) Replication of short selling In Islamic finance. Al-Shajarah. pp. 41-66. ISSN 1394-6870

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Abstract

This paper discusses short-selling and its implication in Islamic capital markets as this has always been a subject of debate. The practice of short-selling in capital markets is considered a tool for providing liquidity and better price discovery to the traders. The use of short-selling in Islamic capital markets is objectionable. The factors that make short-selling non-Shari’ah compliant are: (I) speculation that mostly verges on gambling, (ii) interest, and (iii) its contraven maslahah (public interest), that is, it may result in market manipulation and could potentially wreak havoc on the market. Therefore, the main objective of this paper is to review the structure of short-selling from the Shari’ah perspective. There are mainly six Shari’ah contracts discussed in this paper that can conveniently be used for structuring Shari’ah compliant short-selling. These Shari’ah contracts are: urbun, wa’ad, wakalah, mudharabah, bai’ salam and musharakah.

Item Type:	Article (Journal)
Additional Information:	2241/89347
Uncontrolled Keywords:	Short-selling, Islamic capital market, speculation, Public interest, urbun, wa’ad, wakalah, mudharabah, bai’ salam and musharakah
Subjects:	BPH Islamic Economics
Kulliyyahs/Centres/Divisions/Institutes (Can select more than one option. Press CONTROL button):	Institute of Islamic Banking & Finance (IIiBF)
Depositing User:	Dr Aznan Hasan
Date Deposited:	16 Apr 2021 10:00
Last Modified:	16 Apr 2021 10:00
URI:	http://irep.iium.edu.my/id/eprint/89347

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