Creating a two-way market via short selling and its potential use in the Islamic paradigm

Short selling is the selling of a security that the seller does not own. In conventional finance, the ability to short is considered an important element of an efficient and complete market. For most Muslim scholars, however, short selling is deemed undesirable when read in conjunction with the Hadi...

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Main Author:	Mohamad, Azhar
Format:	Conference or Workshop Item
Language:	English English English
Published:	2015
Subjects:	HG4501 Stocks, investment, speculation
Online Access:	http://irep.iium.edu.my/44745/ http://irep.iium.edu.my/44745/ http://irep.iium.edu.my/44745/1/Ipafem_2015_Glasgow_presented_paper.pdf http://irep.iium.edu.my/44745/3/IPAFEM_Program.pdf http://irep.iium.edu.my/44745/13/44745-ppt.pdf

id	iium-44745
recordtype	eprints
spelling	iium-447452015-11-21T06:23:31Z http://irep.iium.edu.my/44745/ Creating a two-way market via short selling and its potential use in the Islamic paradigm Mohamad, Azhar HG4501 Stocks, investment, speculation Short selling is the selling of a security that the seller does not own. In conventional finance, the ability to short is considered an important element of an efficient and complete market. For most Muslim scholars, however, short selling is deemed undesirable when read in conjunction with the Hadith “la tabi’ ma laysa ‘indaka”, which carries a verbatim meaning of “sell not what is not with you”. There are, however, alternative interpretations of this Hadith that may justify the use of covered short selling as one of the legitimate instruments in the Islamic paradigm. Covered short selling, which entails borrowing a security for the purpose of shorting it, may be used efficiently to lower asset prices, as theorized by Miller (1977). This paper discusses about the short selling mechanism and argues that short selling may be beneficial to consumers in an Islamic market as it creates a two-way market mechanism and can be used to stabilize asset prices. 2015 Conference or Workshop Item PeerReviewed application/pdf en http://irep.iium.edu.my/44745/1/Ipafem_2015_Glasgow_presented_paper.pdf application/pdf en http://irep.iium.edu.my/44745/3/IPAFEM_Program.pdf application/pdf en http://irep.iium.edu.my/44745/13/44745-ppt.pdf Mohamad, Azhar (2015) Creating a two-way market via short selling and its potential use in the Islamic paradigm. In: International Conference on Islamic Perspective of Accounting, Finance, Economics and Management (IPAFEM 2015), 7-9 April, 2015, University of Glasgow, Scotland. (Unpublished) http://www.gla.ac.uk/schools/business/newsandevents/headline_389561_en.html
repository_type	Digital Repository
institution_category	Local University
institution	International Islamic University Malaysia
building	IIUM Repository
collection	Online Access
language	English English English
topic	HG4501 Stocks, investment, speculation
spellingShingle	HG4501 Stocks, investment, speculation Mohamad, Azhar Creating a two-way market via short selling and its potential use in the Islamic paradigm
description	Short selling is the selling of a security that the seller does not own. In conventional finance, the ability to short is considered an important element of an efficient and complete market. For most Muslim scholars, however, short selling is deemed undesirable when read in conjunction with the Hadith “la tabi’ ma laysa ‘indaka”, which carries a verbatim meaning of “sell not what is not with you”. There are, however, alternative interpretations of this Hadith that may justify the use of covered short selling as one of the legitimate instruments in the Islamic paradigm. Covered short selling, which entails borrowing a security for the purpose of shorting it, may be used efficiently to lower asset prices, as theorized by Miller (1977). This paper discusses about the short selling mechanism and argues that short selling may be beneficial to consumers in an Islamic market as it creates a two-way market mechanism and can be used to stabilize asset prices.
format	Conference or Workshop Item
author	Mohamad, Azhar
author_facet	Mohamad, Azhar
author_sort	Mohamad, Azhar
title	Creating a two-way market via short selling and its potential use in the Islamic paradigm
title_short	Creating a two-way market via short selling and its potential use in the Islamic paradigm
title_full	Creating a two-way market via short selling and its potential use in the Islamic paradigm
title_fullStr	Creating a two-way market via short selling and its potential use in the Islamic paradigm
title_full_unstemmed	Creating a two-way market via short selling and its potential use in the Islamic paradigm
title_sort	creating a two-way market via short selling and its potential use in the islamic paradigm
publishDate	2015
url	http://irep.iium.edu.my/44745/ http://irep.iium.edu.my/44745/ http://irep.iium.edu.my/44745/1/Ipafem_2015_Glasgow_presented_paper.pdf http://irep.iium.edu.my/44745/3/IPAFEM_Program.pdf http://irep.iium.edu.my/44745/13/44745-ppt.pdf
first_indexed	2023-09-18T21:03:36Z
last_indexed	2023-09-18T21:03:36Z
_version_	1777410786112569344

Creating a two-way market via short selling and its potential use in the Islamic paradigm

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