Pricing of Participating Forward Contract

Autor:	Amina Dchieche
Rok vydání:	2020
Předmět:	Profit and loss sharing Microeconomics Forward contract media_common.quotation_subject Risk sharing Business Payment Profit (economics) Islamic finance media_common
Zdroj:	Global Review of Islamic Economics and Business. 8:091
ISSN:	2338-7920 2338-2619
DOI:	10.14421/grieb.2020.082-03
Popis:	The purpose of this work is to model a participating forward contract permitting to avoid unlimited risk and unknown loss using a formula of risk sharing that includes the payment of an additional amount under specific price variations. This contract offers a new tool that Islamic finance can use since this finance is suspicious of classical forward contracts. The modeling is based on the classical forward equation, which incorporates the profit and loss sharing principle derived from Islamic finance. The participating forward is tested on oil data prices to compare the participating forward contract to the classical one. The participating forward offers a better possibility of profit to the seller and the buyer because of the PLS mechanism which reduces the risk for both parties. The main implication of this modeling is that the participating forward can provide some investors and Islamic banks with an alternative to conventional forward contracts.
Databáze:	OpenAIRE
Externí odkaz:	https://explore.openaire.eu/search/publication?articleId=doi_________::f123b0acc58ba9f04a87f18232c0467a https://doi.org/10.14421/grieb.2020.082-03 Zobrazit plný text záznamu