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This study aims to systematically review the literature on modern Islamic finance transactions pertaining to Gharar dimensions. Gharar is defined as uncertainty that potentially leads to ambiguities and conflicts in contracts.

The articles reviewed in this study consisted of 13 articles related to Gharar published between 2013 and 2022. All selected articles were empirically and descriptively searched using specific keywords and strings. The main sources for this study were Scopus and Web of Science (WoS), whereas Google Scholar was a supportive database.

The review found that the dimensions that discussed previous research were trying their best to elaborating Gharar in modern financial transactions. They also demonstrate that rigorous study and deployment of the definition remain in the context defined by jurisprudence scholars. The focus of recent studies pertaining to Gharar is derivatives products that indicate high possibility of uncertainty in its operation.

This method relies heavily on the accessed database, namely, Scopus and WoS, also referred to the articles as recommended by the databases. Furthermore, the criteria of inclusion and exclusion of papers outlined by the authors deemed as an intrinsic limitation in writing systematic literature review.

To the best of the authors’ knowledge, this paper is original in its nature whereby the scholars had different comprehension on how Gharar exists in transaction but they still centred in its original meaning of uncertainty. As a result, this paper also realized how Gharar were interpreted differently relied on the contract’s nature and behaviour. In addition, this paper is expected to contribute to understand how Gharar been interpreted in modern finance transactions and finally reached to the point that further research is needed in establishing Gharar parameter for each contract in Islamic commercial law.

This paper aims to draw the wisdom of the prohibition of Gharar through the lens of institutional and Post‐Keynesian economics.

This research applies the theoretical contributions of the Post‐Keynesian economics and the new institutional economics to clarify the dimensions of Islamic Gharar. This research attempts to see the divergence between theory and practice, looking at empirical data including the information from an interview with one of Indonesian Islamic banks.

The lens of institutional and Post‐Keynesian economics is useful to clarify two dimensions of Gharar; incompleteness of contracting and fundamental uncertainty associated with business. As for the latter dimension of Gharar, the tradition of Post‐Keynesian economics can distinguish “animal spirit in speculation” and “animal spirit in enterprise”, the latter of which should be carefully considered. However, the interview reveals a kind of difficulty for Islamic financial institutions to tackle “Murabaha syndrome”.

This research supports an opinion such that Islamic financial institutions are not necessarily discouraged to share the associated uncertainty with the small‐sized firms in the agricultural and industrial sector, so far as their “enterprise” is based on the Islamic business ethics.

Despite very significant discussions in the literature on the prohibition of Gharar as a fundamental principle of Islamic finance, less has been done to elaborate upon it through the lens of Post‐Keynesian economics which have greatly contributed to shedding analytical lights on “uncertainty”.

The purpose of this paper is to perform Shariah review of Brownian motion that is used for prediction of Islamic stock prices and their volatility.

It uses the Shariah compliant development model guidelines to review the Brownian motion and its applications.

The model of Brownian motion does not involve any variable that renders it non-Shariah compliant; neither all applications of Brownian motion are Shariah compliant. Because the model is based on stochastic properties that involve randomness, therefore the issue of gharar takes the utmost important to handle in the applications of the model. The results need to be analyzed strictly in accordance with the Shariah whether they create any element of gharar or uncertainty in case of expected price and volatility estimates.

The research suffers from the limitation that it analyses only one model of physics, i.e. Brownian motion model from Shariah perspective.

The research opens an area for Shariah analysis of results generated from the application of advanced models of physics on matters related to Islamic financial markets.

The originality of this study stems from the fact that to the best of the authors’ knowledge, it is the first study that extends Shariah guidelines into Financial physics for making the foundations of Islamic econophysics.

This is the first of two papers which examine whether Arab securities regulations can be the subject of a methodological study in comparative securities regulation, especially with reference to EU regulations. Little is known about Arab securities regulation in European academic discourse on financial regulation. Needless to say, the sociopolitical dynamics of Shari'a (Islamic law) have occasionally been decontextualised by Western researchers in a manner that has often resulted in obfuscating a balanced projection of Shari'a's juridical impact. In order, therefore, to provide a fuller analysis, this first paper starts by explaining the importance of examining Shari'a juridically in the broader context of commercial legislation, as despite the relatively stable regulatory status quo, Shari'a still poses juridical risks to imported Western legal concepts. It also examines Shari'a's juridical impact on Jordan, Kuwait and Oman. The second paper, which will appear in a future issue of the Journal, addresses the specific juridical impact of Shari'a on capital markets, before looking at its impact on capital market laws of Jordan, Kuwait and Oman. In order to provide an insight into existing Arab securities regulations, it then moves to survey the securities and company laws in the aforementioned countries. The discussion also includes a brief examination of market conditions, especially the early factors that accompanied the genesis of such Arab securities markets, notably in Kuwait. The second paper concludes by addressing the question of the suitability of the case study Arab markets to comparative studies in EU securities regulation. It explains in the process why the European experience is relevant (particularly in light of the many EU—Arab association agreements due to take effect from 2010, together with EU ‘harmonisation’, ‘minimum standards’, and ‘single Passport’ regulatory concepts).

This paper aims to investigate the financial uncertainty vary according to different financial assets type: conventional and Islamic.

Common factors are related to risk or known information. For this, the authors use general dynamic factor model to extract common variation between both types of indexes. Then they calculate stochastic volatility for each idiosyncratic component. They also carry out the study on three different family indexes respectively, Dow Jones, S&P and MSCI indexes, for the period going from January 1, 2008 to June 30, 2018. Through a comparison analysis with uncertainty index designed for conventional assets, the authors examine the similarity between the two indexes via mean, median and variance tests. They decrypt the interrelation between them by using OLS linear regression, vector autoregressive model.

The findings show that Islamic assets uncertainty is different from conventional uncertainty level. This difference can be due to the Shariah screening and the prohibition of gharar. The main findings suggest that Islamic financial uncertainty is lower than conventional one. The OLS results prove that conventional financial uncertainties have no impact on their Islamic counterparts. In addition, Islamic financial uncertainty appears to have no significant influence on conventional one exception for Dow Jones pair. Overall, the findings support the decoupling hypothesis in term of uncertainty only for SP and MSCI indexes.

Risk averse investors can find their claim in Shariah-compliant assets, as it offers a low level of financial uncertainty. A portfolio manager may benefit from the long run non-association in uncertainty between Islamic and conventional assets especially in time of crisis.

In this work, the authors measured financial uncertainty differently and take into account the specific features of each index type to improve the results quality.

The purpose of this paper is to examine the meaning, nature and measurement of Shariah non-compliant risk faced by Islamic banks.

Al-bai-bithaman ajil (BBA) contract documentation is analyzed in the light of the legal environment in Malaysia and measurement of Shariah non-compliant risk based on constructed or hypothetical cases.

Shariah non-compliant risk will adversely affect bank’s earnings when BBA contracts are deemed invalid in the court of law, either in a foreclosure or ruling via court declaration.

The paper is written based on content analysis, Malaysian legal cases with hypothetical examples for better understanding.

Islamic banking should be able to use the findings to estimate potential loss from Shariah non-compliant risk and make the necessary provisions.

This paper provides new insights of risks faced by credit-intensive Islamic banks, that when relinquishing critical requirement of Islamic contract such as ownership risk will suffer loss.

This paper aims to compare and contrast the concept of conventional futures contract from the Islamic law of contract perspectives. The underlying theory and practice of Islamic finance is based on the principles of Islamic law of contract. Although the necessity of derivative instruments such as the case with futures contract is essential for developments in Islamic finance, the permissibility of using these instruments still remains a debatable issue.

The paper discusses arguments for and against using derivative instruments as in futures, for example, in light with the Qur’an and Sunnah (the Prophet’s traditions), as well as the views of classical scholars, jurists and contemporary researchers. Arguments for and against are analysed systematically to derive a logical conclusion.

The study finds that majority scholars consider futures contracts as non-compliant with the Islamic law due to the fact that selling something that does not exist, deferment in the both counter values, gharar or ambiguity and excessive risk taking, pure speculation and sale of one debt for another.

The study focuses narrowly on conventional futures contract. Analysing other financial derivative contracts could be a future research endeavour.

The study has so far found the verdict of impermissibility of conventional futures contract in its current form as has been argued by majority scholars in the premise that they do not comply with the Islamic law. Policymakers and industry practitioners need to take this opinion of majority scholars while developing new Islamic financial derivatives.

To the best of the author's knowledge, the present research is the first attempt so far that explained the validity of conventional futures by analysing arguments of classical and contemporary jurists, scholars and researchers.

This paper aims to examine some issues in IFRS9 with regards to classification and measurement of Islamic financial assets. In addition, the paper discusses the Shariah concerns on the use of fair value to measure financial assets.

This paper adopts qualitative method via the study of documents and textual analysis of Shariah opinions of scholars and relevant accounting standards.

The paper found that the classification and measurement of equity-based Islamic financial assets do not fit into the “default” classification category of amortised cost, as the future cash flow receivable does not constitute solely the payment of principal and interest (fixed rate payment). With regards to fair value measurement, Shariah concern arises during the adoption of fair value at Level 2 (reference of asset values from input other than quoted prices in active markets) and Level 3 (use of discounted cash flow method to arrive to asset valuation) because of the existence of in uncertainty or gharar as compared to Level 1 (fair value referred to quoted prices of similar assets).

Findings of the paper provide a starting point for a debate and extensive research on issues related to classification and measurement of Islamic financial assets and the use of fair value as a method of subsequent revaluation of Islamic financial assets. The Shariah analysis in the paper is useful for International Accounting Standard Board to engage with Islamic financial institutions and local accounting standard setters to reflect the unique nature of Shariah-compliant financial instruments. The paper serves as a basis to devise technical solutions to address accounting and reporting issues of Islamic financial instruments.

The paper offers Shariah analysis on the issue of classification, measurement and impairment model for Islamic financial assets. The paper is considered as the first paper that examines areas of possible tensions when applying IFRS9 to the accounting of Islamic financial assets. In addition, the paper has contributed to the literature in Islamic accounting and auditing.

The purpose of this paper is to offer an alternative conceptualisation of commercial insurance that is based on service thinking and compares it to the ideas flowing from goods thinking that currently appears to be a dominant mindset.

When deliberating on commercial insurance, Muslim jurists and scholars followed a misleading route of logical reasoning that is based on comparing insurance to other approved commercial contracts within Islamic Law. In this paper, the author questions such reasoning by contrasting the framework of service thinking to that of goods thinking.

The alternative framework proposed in this paper repositions commercial insurance as a unique type of service (rather than a good). It shows that commercial insurance can be seen as a bundle of benefits, which unfold in a gradual, intermittent, sporadic manner depending on the circumstances. This mode of a servicing relationship focuses on harm removal rather than the opportunistic actualisation of unfair monetary gain. Insurance premium is conceptualised as an availability fee, while compensation payout is recast as the restoration of value.

Muslim jurists and marketing practitioners can use this framework to further scrutinise the permissibility of different varieties of commercial insurance in the contexts of both Muslim and non-Muslim majority countries. As service thinking radically repositions the essence and structure of commercial insurance, the views on the relevance of “gharar” and “riba” may undergo significant re-conceptualisation. Moreover, the design of takaful options can be improved on this basis.

Service thinking can better elucidate a positive societal role of commercial insurance that is in accord with the societal and Islamic maxim of harm removal. Some objections to commercial insurance relate to public policy failures. Well-regulated commercial insurance industries can substantially contribute to the economic development of impoverished societies.

This paper exemplifies compelling power as well as potential of the discipline of Islamic marketing in contributing to significant debates concerning the permissibility of modern commercial options.