Financial Engineering and Islamic Contracts »

Munawar Iqbal is Chief of Research in Islamic Banking and Finance at the Islamic Development Bank, Jeddah, the largest Islamic financial institution in the world. Tariqullah Khan is Senior Economist at the Islamic Research and Training Institute, Islamic Development Bank.

Financial engineering, a process of formulating creative solutions to problems in finance, plays a vital role in enhancing capital market efficiency. An interesting innovation in recent times has been the use of profit-sharing contracts by Islamic banks. In conventional finance, derivatives and commodity futures are innovations that could be of use to Islamic banks. This volumes explains these innovations with a view to learn from different experiences.