By Mahadi Ahmad and Ibrahim VambaFofana
Abstract
It is a universal fact that in any financial transaction there are risks, which may be inherent or operational. This is more so in Islamic finance due to its distinct mode of operation – operations based on principles derived from divine laws which are enshrined in the Holy Quran and Hadith. With the fact that the Islamic financial institutions are responsible to Allah and then to their shareholders and depositors, their responsibilities became higher than their conventional counterparts. It is to this reason this paper aims at studying the jurisprudential principles of risks in certain Islamic finance contracts and how to manage same. The methodology of the paper is analytical in nature based on the contents of the Islamic jurisprudential literature and contemporary writers. The paper finds that the establishment of the jurisprudential principles in certain Islamic finance contract will enable to pave the way for Shariah compliant devices to carry out those contracts with a greater sense of mitigation of those risks.
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