Radical uncertainty, non-predictability, antifragility and risk-sharing Islamic finance

Umar Rafi (), Abbas Mirakhor () and Hossein Askari ()
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Umar Rafi: International Centre for Education in Islamic Finance (INCEIF), Kuala Lumpur
Abbas Mirakhor: INCEIF

PSL Quarterly Review, 2016, vol. 69, issue 279, 337-372

Abstract: Under conditions of radical uncertainty, risk sharing renders financial systems antifragile. The goal in this introductory paper is to show that risk-sharing Islamic finance shares the characteristics of an antifragile system by mapping some characteristics of antifragility onto those of risk-sharing Islamic finance. We compare the benefits of a risk-sharing financial system to those of the dominant risk-transfer/risk-shifting conventional system of finance, basing ourselves on the criteria of antifragility. We focus on the argument that the antifragility principle of “skin-in-the-game” is equivalent to risk-sharing Islamic finance requirement of “no gain without risk.”

Keywords: risk sharing; antifragility; skin-in-the-game; no gain without risk; Islamic finance (search for similar items in EconPapers)
JEL-codes: D81 D89 E44 F34 G32 (search for similar items in EconPapers)
Date: 2016
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DOI: 10.13133/2037-3643_69.279_3

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