Peter Lang Gmbh, Internationaler Verlag Der Wissenschaften Antifragility of Islamic Finance: The Risk-Sharing Alternative: 1 (Finance, FinTech, and Crowdfunding in Islam)

Antifragility of Islamic Finance: The Risk-Sharing Alternative explains how risk-sharing, as defined under Islamic finance, makes financial systems antifragile. It highlights the benefits of 100% equity-based finance over debt-based finance. The recent financial crisis has given rise to discussions on a new approach to risk management called antifragility. This concept specifies conditions under which systems become resilient to shocks caused by Black Swans-highly unpredictable outlier events that have a major negative (or positive) consequence when they occur, with their occurrence only explained retrospectively. Per this concept, the long-term survivability of any system centers exclusively on its antifragile nature, that is, its ability to absorb and even benefit from Black Swan-type shocks. This book aims to investigate risk-sharing Islamic finance as an antifragile system. As a by-product of the Great Recession, the problems of debt-based financial systems are starting to be highlighted by industry and by academia. The antifragile solution for avoiding future financial crises is primarily centered on moving the existing financial system towards more equity and less debt, thereby introducing skin-in-the-game into financial transactions. This book introduces a model of a 100% equity-based financial system, centered on risk sharing, as a possible alternative to the contemporary debt-based, conventional financial system, which is based on risk transfer and on risk shifting. In essence, this book attempts to provide a practical model for an antifragile financial system by evaluating the characteristics of Islamic finance under the criteria of antifragility. Review "Ten years after the 2007 global financial crisis and 20 years after the Asian financial crisis, you would have thought that mainstream economics would have been discredited for its failure to predict and offer credible solutions for radical uncertainty and fragile financial systems. Umar Rafi and Abbas Mirakhor's book Antifragility of Islamic Finance: The Risk-Sharing Alternative offers a rare and revolutionary position that the equity and risk-sharing nature of Islamic finance is more robust, resilient, and antifragile than conventional debt finance, which has become concentrated, fragile, and unmanageable. The authors succinctly map the original work of Mandelbrot, Nassim Taleb, and Kahneman into the basic philosophy of Islamic finance. I commend this book as a fundamental building block for the foundations of Islamic finance as mainstream finance." --Tan Sri Andrew Sheng, distinguished fellow at the Asia Global Institute, University of Hong Kong, chief advisor to the China Banking Regulatory Commission, and one of TIME Magazine's 100 most influential people in the world, 2013. "The recent Great Recession has revealed a dramatic lack of resiliency of the current economic and financial system. Umar Rafi and Abbas Mirakhor have carried out an excellent in-depth analysis of the quantitative and qualitative underlying factors leading to the Great Recession, concluding with a deep insight on why and how to prevent and/or prepare for another one. They offer a unique transformational solution based on the disruptive concept of antifragility, which is gaining wide attention in the economic and financial community. This is a must-read book for anyone interested in evaluating and constructing an alternate financial and economic system, based on 100% equity that will offer more resiliency, to the current debt-based financial system that is extremely fragile." --Ken Tachibana, managing principal, Intelligence Capital "This is a must-read book for practitioners and policy makers contemplating a truly sound business model for Islamic finance. The book articulates well the superiority of risk-sharing based finance in comparison to debt-based finance by cleverly drawing the parallels of risk-sharing and antifragility (a new concept introduced by Nas