An analysis of the normative parameters of reward and risk in Islamic finance
Author
Source
ISRA International Journal of Islamic Finance
Issue
Vol. 12, Issue 3 (31 Dec. 2020), pp.303-323, 21 p.
Publisher
International Shari'ah Research Academy for Islamic Finance
Publication Date
2020-12-31
Country of Publication
Malaysia
No. of Pages
21
Main Subjects
Financial and Accounting Sciences
Abstract EN
Purpose-This study aims to define the parameters of the reward-risk principle in Islamic finance as established in the literature and discuss propositions that are presented on how such a principle is to be applied to Islamic banking products.
Design/methodology/approach-A descriptive approach is used to explore the normative parameters and criticisms of the application of reward-risk in Islamic finance.
Findings-The study finds that the principle of reward-risk is embodied in the multi-component concept of ʿiwaḍ (counter value) which must be evident in market transactions that involve commercial exchanges.
The components include risk, costs, effort, value-adding and capital, all of which apply uniquely to different contractual forms of financing.
Research limitations/implications-The study uses academic literature and industry documents along with modest contact with prominent practitioners who provided general feedback on prevalent Islamic finance industry practices.
Practical implications This study exposits the variety of approaches in applying the reward-risk principle and sheds light on the primary elements of the principle which will facilitate its greater consideration by the Islamic finance industry.
Originality/value-This study is a meaningful attempt at conveniently summing up and applying the parameters that are considered when discussing the scope of the reward-risk principle in Islamic finance
American Psychological Association (APA)
Bin Ayshah, Muhammad. 2020. An analysis of the normative parameters of reward and risk in Islamic finance. ISRA International Journal of Islamic Finance،Vol. 12, no. 3, pp.303-323.
https://search.emarefa.net/detail/BIM-1429557
Modern Language Association (MLA)
Bin Ayshah, Muhammad. An analysis of the normative parameters of reward and risk in Islamic finance. ISRA International Journal of Islamic Finance Vol. 12, no. 3 (2020), pp.303-323.
https://search.emarefa.net/detail/BIM-1429557
American Medical Association (AMA)
Bin Ayshah, Muhammad. An analysis of the normative parameters of reward and risk in Islamic finance. ISRA International Journal of Islamic Finance. 2020. Vol. 12, no. 3, pp.303-323.
https://search.emarefa.net/detail/BIM-1429557
Data Type
Journal Articles
Language
English
Notes
Includes bibliographical references : p. 320-323
Record ID
BIM-1429557