Islamic Interbank Money Market: Contracts, Instruments and Their Pricing

Buerhan Saiti, Aznan Hasan and Engku Rabiah Adawiah Engku Ali
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Buerhan Saiti: International Islamic University Malaysia
Aznan Hasan: International Islamic University Malaysia
Engku Rabiah Adawiah Engku Ali: International Islamic University Malaysia
Authors registered in the RePEc Author Service: Burhan Uluyol

Chapter Chapter 5 in Islamic Capital Markets, 2016, pp 67-100 from Palgrave Macmillan

Abstract: Abstract This chapter discusses the Islamic interbank money market, its instruments and operations. The discussion demonstrates that the existence of a viable Islamic interbank money market is crucial for the successful implementation of an Islamic financial system. The chapter examines the various interbank money market instruments, their underlying Islamic contracts and their pricing mechanisms, with appropriate examples. The availability of various Islamic interbank money market instruments allows Islamic banks to cover their exposure (in case of deficit) and make placement on short-term basis (in case of surplus). Moving forward, a greater variety of instruments with fixed return mechanisms and tradability features, which at the same time invite fewer Shariah issues, must be offered in the market to ensure a more vibrant Islamic interbank money market.

Keywords: Islamic finance; Islamic interbank money market; Islamic contracts; Pricing (search for similar items in EconPapers)
Date: 2016
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Persistent link: https://EconPapers.repec.org/RePEc:pal:pcichp:978-3-319-33991-7_5

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DOI: 10.1007/978-3-319-33991-7_5

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