Category Archives: Articles on Islamic Finance

Risk Aversion And Islamic Financial Economics

Salman Ahmed Shaikh Risk aversion is an observed behavior and there is empirical evidence that people generally are risk averse. By risk averse, we mean to say that people are willing to pay a higher risk premia than what is … Continue reading

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Risk Management with Islamic Derivatives: Do We Really Need Them

Salman Ahmed Shaikh Islamic finance industry assets are now worth more than $1 trillion. The industry has shown resilience and double digit growth even in the face of global recession. However, there was much more expected from them on different … Continue reading

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Form Versus the Substance Debate in Islamic Finance

Salman Ahmed Shaikh In currently practiced Islamic banking, the debt based modes of finance are used predominantly and these products are priced with same interest based benchmarks, which the conventional banks use. It seems that practiced Islamic banking is far … Continue reading

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Problems with Inflation Indexation of Loans

Salman Ahmed Shaikh In past, some scholars have proposed to index financial loans in inflationary periods with some inflation index. In this article, we analyze the potential problems with this proposal. Problems from Applied Perspective If this proposal is suggested … Continue reading

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Opportunity Cost of Capital in Islamic Economic Framework

Salman Ahmed Shaikh Opportunity cost is a useful concept in economics. Below, we try to explain how this concept is used to justify interest by some contemporary scholars. If I have a job paying me $1,000 a month and I … Continue reading

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