Islamic Finance in the Light of Modern Economic Theory

Part I. Islamic finance: rationale, history, instruments and the legal framework.- 1. Introduction.- 2. Islamic financial instruments.- 3. Historical roots and evolution of Islamic financial thought.- Part II. Law of unexpected consequences.- 4. The incidence of taxation.- 5. Basics of Corporate Finance: Miller-Modigliani (MM) Theorem.- Part III. Game theory and mechanism design.- 6. Game theory.- 7. Revelation Principle.- 8. Monopolistic Screening.- 9. The multi-dimensional screening model.- Part IV. Mechanism design applications to Islamic finance.- 10. Business loans, trust and contract restriction faced by Islamic banks.- 11. Loans provision and adverse selection within orthodox religious communities.- 12. Shariah compliance and risk-inventive trade-offs.-13. Shariah compliance, positive assortative matching and performance of Islamic financial institutions.- 14. Optimal Incentives for Takaful operators. 15. When short-selling prohibition can be optimal?.- Part V. Conclusions