Artikel

An analysis of the normative parameters of reward and risk in Islamic finance

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.

Sprache
Englisch

Erschienen in
Journal: ISRA International Journal of Islamic Finance ; ISSN: 2289-4365 ; Volume: 12 ; Year: 2020 ; Issue: 3 ; Pages: 303-323 ; Bingley: Emerald

Klassifikation
Wirtschaft
Thema
AITAB
Islamic banking products
MMP
MPO
Reward-risk parameters

Ereignis
Geistige Schöpfung
(wer)
Mohamed Benaicha
Ereignis
Veröffentlichung
(wer)
Emerald
(wo)
Bingley
(wann)
2020

DOI
doi:10.1108/IJIF-07-2019-0100
Handle
Letzte Aktualisierung
10.03.2025, 11:43 MEZ

Datenpartner

Dieses Objekt wird bereitgestellt von:
ZBW - Deutsche Zentralbibliothek für Wirtschaftswissenschaften - Leibniz-Informationszentrum Wirtschaft. Bei Fragen zum Objekt wenden Sie sich bitte an den Datenpartner.

Objekttyp

  • Artikel

Beteiligte

  • Mohamed Benaicha
  • Emerald

Entstanden

  • 2020

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