Page 116 - IANUS Diritto e finanza - Rivista semestrale di studi giuridici - N. 29 - giugno 2024 - Il diritto alla sostenibilità: strumenti giuridici della transizione ecologica

VALENTINO CATTELAN

economy , can involve
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- a variety of sales and exchange contracts (e.g. murabaha, mark-up double
sale; salam, forward sale with prepaid price),
- as well as of rent, hire, labour and leasing agreements (e.g. ijarah, lease or
hire contract; istisna‘, commission to manufacture).
Embracing this notion of legitimate trade, Islamic financial institutions can
provide today, next to participatory engagements as mentioned above
(musharakah and mudarabah), all the products and services that are available in the
conventional market through their own alternative finance model. Islamic
financial certificates (so-called sukuk) replicate these contractual structures in the
capital market, following criteria of Shari‘ah compliance . It is significant to note
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that, as previously mentioned, the Islamic financial market has also developed
alternative tools for the management of uncertainty (gharar) through the industry
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of mutual insurance (takaful).
Apart from the effective application in Islamic finance of risk-sharing instead of
trade as exchange (in the light of what has been summarized above), what is
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relevant for our discussion is to note how much in both Muslim and non-Muslim
narratives about Islamic finance risk-sharing is presented as vehicle per se of some
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sort of ‘social impact’, potentially preferable to interest-based instruments for

law: riba, gharar and Islamic banking, II ed., London, 1992, is still today a very useful source. See also,
CATTELAN, From the concept of haqq to the prohibitions of riba, gharar and maysir in Islamic finance, in
International Journal of Monetary Economics and Finance, 2 (3/4), 2009, 384-397.
66 On the centrality of the ‘real economy’ as a parameter for the validity of Islamic financial
transactions, in relation to the features of Islamic property rights, please refer to CATTELAN, Legal
pluralism, property rights and the paradigm of Islamic economics, op. cit.; CATTELAN, L’economia islamica:
alternativa apparente o reale?, op. cit. For a critical perspective about what is ‘real’ in Islamic finance,
BEEFERMAN - WAIN, Getting real about Islamic finance, 2016, available at SSRN:
https://ssrn.com/abstract=2849286 (accessed 25 July 2024).
67 For the description of all the contracts and financial structures in use in the Islamic financial
market, please refer, again, to AYUB, Understanding Islamic finance, op. cit., and VOGEL - HAYES,
Islamic law and finance. Religion, risk and return, op. cit. For a critical approach to the concept of
Shari‘ah compliance, please refer to CATTELAN, The Typewritten Market: Shari‘ah-compliance and
securitisation in the law of Islamic finance, in Arab Law Quarterly, 35 (1-2), 2021, 74-91.
68 Recently, on the matter, MOHD NOH – NOR AZELAN – ZULKEPLI, A review on gharar dimension
in modern Islamic finance transactions, in Journal of Islamic Accounting and Business Research, 2024
(available online; accessed 24 August 2024).
69 It is well-known that, despite the theoretical preference for participatory contracts, exchange
(non-participatory) contracts shape, in practice, most of the transactions in Islamic finance. This is
due for a variety of reasons related to risk and credit management procedures (more liquidity;
reduction of operational risk; less moral hazard in the provision of financing and so on), and do not
violate Islamic principles (according to which, as said in the main text, legitimate ‘trade’ – as
opposed to riba – is the pillar of any good market).
70 I am using here the word ‘narrative’ in the sense of the standard presentation of Islamic finance
in relation to the argument of its ‘moral advantage’, as still widespread in academic literature as
well as in the practical operativity of the market. The adjectives ‘Muslim’ and ‘non-Muslim’ indicate
that similar patterns of this ‘narrative’ can be found both in intellectual circles fostered by Islamic
religion connotations and outside them.

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