On the pareto-optimality of futures contracts over Islamic forward contracts: implications for the emerging Muslim economies

Ebrahim, M. Shahid; Rahman, Shafiqur

doi:10.1016/j.jebo.2003.09.007

Cited by 21 publications

(16 citation statements)

References 15 publications

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“…Contemporary Shari'ah scholars therefore tend to allow investment in stocks with tolerable proportions of revenues from prohibited activities under the condition of Haram purifcation. 2 This condition requires investors to donate the equivalent proportion of their distributions from such companies to charities to purify their earnings from prohibited activities (Derigs and Marzban 2008;Ebrahim and Rahman 2005;El-Gamal 2006;Jaffer 2004;Rahail 2008).…”

Section: 1mentioning

confidence: 99%

Islamic mutual funds’ financial performance and international investment style: evidence from 20 countries

Hoepner¹,

Rammal²,

Rezec³

2011

The European Journal of Finance

229

152

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We pursue the first large scale investigation of a strongly growing mutual fund type: Islamic funds. Based on an unexplored, survivorship bias adjusted dataset, we analyse the financial performance and investment style of 265 Islamic equity funds from twenty countries. As Islamic funds often have diverse investment regions, we develop a (conditional) three level Carhart model to simultaneously control for exposure to different national, regional and global equity markets and investment styles. Consistent with recent evidence for conventional funds, we find Islamic funds to display superior learning in more developed Islamic financial markets. While Islamic funds from these markets are competitive to international equity benchmarks, funds from especially Western nations with less Islamic assets tend to significantly underperform. Islamic funds' investment style is somewhat tilted towards growth stocks. Funds from predominantly Muslim economies also show a clear small cap preference. These results are consistent over time and robust to time varying market exposures and capital market restrictions.

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Section: 1mentioning

confidence: 99%

Islamic mutual funds’ financial performance and international investment style: evidence from 20 countries

Hoepner¹,

Rammal²,

Rezec³

2011

The European Journal of Finance

229

152

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“…As a result, the authors question the legibility of certain alternatives contracts, particularly, Islamic profit rate swaps through wa'd (promise) contracts. Ebrahim and Rahman (2005) conducted a Pareto-optimal analysis of futures contracts over Islamic forward contracts. Alamad (2017) stresses that futures contracts are among the current central topics of research in the framework of Islamic finance architecture.…”

Section: Literature Review and Research Methodologymentioning

confidence: 99%

Islamic finance and food commodity trading: is there a chance to hedge against price volatility and enhance food security?

Kalimullina

Orlov

2020

Heliyon

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This paper evaluates current food commodity trading from the Shariah point of view, which is particularly relevant for the MENA region. It focuses on futures contracts as the main instrument for grain trading and analyzes the traders' activities. Through a qualitative and multifaceted approach, the paper accumulates and evaluates the suggestions for 15 Shariah-based alternatives to futures by contemporary researchers. Sukuk, commodity funds and takaful programs are among potential structures that could be developed and broadly implemented. The research compares the current criticism of futures markets with the opinions of Islamic scholars and researchers, as well as Shariah standards. The paper also evaluates several recent suggestions by researchers to raise the efficiency of the international commodity trading market for the sake of food security. The results show that there is space for cooperation taking into account Islamic financial principles and conventional commodity exchange regulations, in combining existing best practices of the latter and the rulings of the former in engineering a sounder system of grain trading for the benefit of market players and the end consumers. This would require a joint effort and support from exchanges, standard-setting bodies, and regulators. Among the areas of cooperation are the approach towards corners (ihtikar), squeezes, speculation (gharar, maysir, and najash), and defining the border between reasonable and excess speculation; financial architecture using new technologies in developing a commodity trading contract conforming to the Shariah regulations and the exchange requirements. There is a need to develop the ideas for global food contracts and grain reserve systems, and to test the contracts based on existing exchanges.

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“…The above illustrates that the current practice of Islamic banking, which is based on implementing medieval (and often inefficient) Islamic financial instruments, is nothing less than the failure of the religious establishment to engage in ijtihād. This issue is reiterated in Ebrahim and Rehman (2005), who document the inefficiency of the medieval Islamic forward sale (i.e., Bai" al-Salam) in contrast to conventional futures on Islamically permitted commodities.…”

Section: Do the Jurists Have The Capability Of Advancing An Efficientmentioning

confidence: 99%

The Political Economy and the Perennial Underdevelopment of the Muslim World

Ebrahim

Sheikh

2012

SSRN Journal

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On the pareto-optimality of futures contracts over Islamic forward contracts: implications for the emerging Muslim economies

Cited by 21 publications

References 15 publications

Islamic mutual funds’ financial performance and international investment style: evidence from 20 countries

Islamic mutual funds’ financial performance and international investment style: evidence from 20 countries

Islamic finance and food commodity trading: is there a chance to hedge against price volatility and enhance food security?

The Political Economy and the Perennial Underdevelopment of the Muslim World

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