Efficiency of Islamic Financial Markets

Mohammad M. Bani Essa, Abdalla M. Al Badarin

Abstract


This study aims to explore the impact of the provisions of Sharee'ah that are related to the market on the efficiency of the financial markets, and their role in increasing the ability of financial markets to price securities fairly. The study showed that there are many provisions of Sharee'ah which can regulate the structure of the market and guarantee the function of the market mechanism of supply and demand. It also showed that there are a group of provisions that can guarantee the freedom for all dealers and provide them with the relevant information. Furthermore, the study provides evidence supporting the ability of Sharee'ah in providing the economic agents with the accurate information which will be reflected in the prices of securities. Finally, the study showed the importance of self-monitoring of participants as well as the importance of controlling of financial markets administration.


Keywords


Islamic financial markets, efficiency, information, the provisions of Sharee'ah, fair pricing

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