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Urbūn (Earnest Money): Legal Framework in Islamic and Positive Law and Comparison with the Call Option Contract
In: Arab Law QuarterlyAbstract
Financial derivatives such as futures, options and swaps play an important role in the development of financial markets because they can be employed in many ways, notably for hedging, arbitrage and speculation. However, for a variety of reasons, such conventional instruments are considered unlawful under Islamic law and are impermissible in Islamic financial markets. The search for a Sharīʿah-compliant alternative has become a major concern to Islamic financial and legal engineering. Indeed, in this article, we will study the ʿurbūn (earnest money) contract according to Islamic law and positive law in several Muslim countries. Thereafter, we will examine the possibility of substituting the conventional call option contract (Call) by the ʿurbūn contract for hedging market risk, by providing a technical and legal comparison between the two contracts.
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| All Time | Past Year | Past 30 Days | |
|---|---|---|---|
| Abstract Views | 519 | 103 | 16 |
| Full Text Views | 20 | 1 | 0 |
| PDF Views & Downloads | 32 | 2 | 0 |
Urbūn (Earnest Money): Legal Framework in Islamic and Positive Law and Comparison with the Call Option Contract
In: Arab Law QuarterlyAbstract
Financial derivatives such as futures, options and swaps play an important role in the development of financial markets because they can be employed in many ways, notably for hedging, arbitrage and speculation. However, for a variety of reasons, such conventional instruments are considered unlawful under Islamic law and are impermissible in Islamic financial markets. The search for a Sharīʿah-compliant alternative has become a major concern to Islamic financial and legal engineering. Indeed, in this article, we will study the ʿurbūn (earnest money) contract according to Islamic law and positive law in several Muslim countries. Thereafter, we will examine the possibility of substituting the conventional call option contract (Call) by the ʿurbūn contract for hedging market risk, by providing a technical and legal comparison between the two contracts.
| All Time | Past Year | Past 30 Days | |
|---|---|---|---|
| Abstract Views | 519 | 103 | 16 |
| Full Text Views | 20 | 1 | 0 |
| PDF Views & Downloads | 32 | 2 | 0 |