Financial Engineering and Islamic Contracts

MUNAWAR IQBAL is Chief of Research in Islamic Banking and Finance at the Islamic Development Bank, Jeddah, the largest Islamic financial institution in the world. He has served as Economic Adviser to the Al-Rajhi Banking and Investment Corporation, Saudi Arabia, the largest Islamic commercial bank in the world. He has also served as Director at the International Institute of Islamic Economics at the Islamic University in Islamabad, Pakistan. He has taught there and at McMaster and Simon Fraser Universities in Canada and has published and edited many books and papers in the area of Islamic Bank

The text is the first of its kind on financial engineering and risk management in Islamic finance. The text also presents some practical issues concerning futures contracts and how these can be handled from an Islamic perspective. The text explores the prospects of some Islamic contracts having similarity with commodity futures;The text is the first of its kind on financial engineering and risk management in Islamic finance. It sets out detailed guidelines for financial engineering from an Islamic perspective. The text also presents some practical issues concerning futures contracts and how these can be handled from an Islamic perspective. It brings out the different points of view in this respect and reflects the current state of knowledge as well as the challenges that lie ahead for financial engineers. The text explores the prospects of some Islamic contracts having similarity with commodity futures; forward contracts, especially in agriculture; and Islamic permissible contractual arrangements for resource mobilization by the public sector. It also makes an analytical comparison between debt and equity contracts with regard to incentive compatibility and efficiency.