Radical uncertainty, non-predictability, antifragility and risk-sharing Islamic finance
Under conditions of radical uncertainty, risk sharing renders financial systems anti-fragile. Our goal in this paper is to show that risk-sharing Islamic finance (RSIF) shares the characteristics defined by Taleb for an anti-fragile system, by mapping some characteristics of anti-fragility onto thos...
| Main Authors: | , , |
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| Format: | Article |
| Language: | English |
| Published: |
Associazione Economia civile
2016-12-01
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| Series: | PSL Quarterly Review |
| Subjects: | |
| Online Access: | http://ojs.uniroma1.it/index.php/PSLQuarterlyReview/article/view/13794/13565 |
| _version_ | 1811306786855059456 |
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| author | Umar Rafi Abbas Mirakhor Hossein Askari |
| author_facet | Umar Rafi Abbas Mirakhor Hossein Askari |
| author_sort | Umar Rafi |
| collection | DOAJ |
| description | Under conditions of radical uncertainty, risk sharing renders financial systems anti-fragile. Our goal in this paper is to show that risk-sharing Islamic finance (RSIF) shares the characteristics defined by Taleb for an anti-fragile system, by mapping some characteristics of anti-fragility onto those of risk-sharing Islamic finance. A key insight around which such a connection can be established is by relating the principle of “no risk-no gain”from Islamic finance to the concept of skin-in-the-game from anti-fragility theory. The relationship is then extended to other characteristics of the two frameworks, to show that RSIF overlaps with anti-fragility over many dimensions. The broader case for an antifragile system includes another important characteristic, namely “soul in the game” and concern for social justice. It is the authors’ hope that emerging research on anti-fragility, combined with the emerging research on RSIF, can have a lasting impact on the field of finance by laying the foundations for a compelling case that it is time for humanity to replace the dominant debt-based risk transfer/risk shifting financial system with a system in which everyone shares the risks faced by society.
JEL: D81, D89, E44, F34, G32 |
| first_indexed | 2024-04-13T08:52:55Z |
| format | Article |
| id | doaj.art-182171d0de574486a84d00315620d54e |
| institution | Directory Open Access Journal |
| issn | 2037-3635 2037-3643 |
| language | English |
| last_indexed | 2024-04-13T08:52:55Z |
| publishDate | 2016-12-01 |
| publisher | Associazione Economia civile |
| record_format | Article |
| series | PSL Quarterly Review |
| spelling | doaj.art-182171d0de574486a84d00315620d54e2022-12-22T02:53:26ZengAssociazione Economia civilePSL Quarterly Review2037-36352037-36432016-12-0169279337372Radical uncertainty, non-predictability, antifragility and risk-sharing Islamic financeUmar RafiAbbas MirakhorHossein AskariUnder conditions of radical uncertainty, risk sharing renders financial systems anti-fragile. Our goal in this paper is to show that risk-sharing Islamic finance (RSIF) shares the characteristics defined by Taleb for an anti-fragile system, by mapping some characteristics of anti-fragility onto those of risk-sharing Islamic finance. A key insight around which such a connection can be established is by relating the principle of “no risk-no gain”from Islamic finance to the concept of skin-in-the-game from anti-fragility theory. The relationship is then extended to other characteristics of the two frameworks, to show that RSIF overlaps with anti-fragility over many dimensions. The broader case for an antifragile system includes another important characteristic, namely “soul in the game” and concern for social justice. It is the authors’ hope that emerging research on anti-fragility, combined with the emerging research on RSIF, can have a lasting impact on the field of finance by laying the foundations for a compelling case that it is time for humanity to replace the dominant debt-based risk transfer/risk shifting financial system with a system in which everyone shares the risks faced by society. JEL: D81, D89, E44, F34, G32http://ojs.uniroma1.it/index.php/PSLQuarterlyReview/article/view/13794/13565Risk sharingantifragilityskin-in-the-gameno gain without riskIslamic financ |
| spellingShingle | Umar Rafi Abbas Mirakhor Hossein Askari Radical uncertainty, non-predictability, antifragility and risk-sharing Islamic finance PSL Quarterly Review Risk sharing antifragility skin-in-the-game no gain without risk Islamic financ |
| title | Radical uncertainty, non-predictability, antifragility and risk-sharing Islamic finance |
| title_full | Radical uncertainty, non-predictability, antifragility and risk-sharing Islamic finance |
| title_fullStr | Radical uncertainty, non-predictability, antifragility and risk-sharing Islamic finance |
| title_full_unstemmed | Radical uncertainty, non-predictability, antifragility and risk-sharing Islamic finance |
| title_short | Radical uncertainty, non-predictability, antifragility and risk-sharing Islamic finance |
| title_sort | radical uncertainty non predictability antifragility and risk sharing islamic finance |
| topic | Risk sharing antifragility skin-in-the-game no gain without risk Islamic financ |
| url | http://ojs.uniroma1.it/index.php/PSLQuarterlyReview/article/view/13794/13565 |
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