Bourse According to Shariʿah (book)
- abstract
Bourse according to Shariʿah (book) (in persian: بورسبازی در نگاه شریعت) is in the field of new transactions jurisprudence and has two general sections that examine stock market from the point of view of theology and jurisprudence. This book was written by Mohammad Tawheedi and Sayid Abbas Mousaviyan besides using their previous articles. The author has interpreted short-term transactions with high risk and the intention of profiting from price fluctuations as stock market transactions. According to him, the jurisprudence of such transactions is permissible. Unless it applies to the issue of other topics such as market manipulation or the use of secret information which are destructive market behaviors and corrupt the economic system.
Overview
Stock market according to Shariʿah (book) is related to the jurisprudence of financial markets written by Seyyed Abbas Mousaviyan (died 2018) and Mohammad Tohidi. This book was published by the Securities and Exchange Organization and Imam Sadiq University (PBUH) in 2019. The book aims to explain the topic and provide a definition of bourse. After stating the issue, he has done a comprehensive jurisprudential analysis of various dimensions of bourse. The dominant approach in this book is to convey ideas and collect common elements from the words of experts. Therefore, in a few cases, the author's personal analysis has been presented. The book consists of seven parts, which according to the author, different parts of the book are independent articles and are collected in this book.
Authors
Mohammad Tohidi, the corresponding author of the book, is teaching and researching in the fields of Islamic financial management, Islamic capital market, Islamic banking, and many books and articles have been published by him. Seyyed Abbas Mousaviyan was another author of the book, seminary graduate and former head of Islamic Systems Research Institute, member of the jurisprudential committee of the Securities and Exchange Organization and member of the jurisprudential advisory council of the Central Bank of the Islamic Republic of Iran. Mousaviyan received the first prize of Islamic humanities in the second international congress of Islamic humanities. He has written a lot of books and articles in the field of economic topics. Among his scientific work and research, we can refer to Islamic banking, which has been ranked in several conferences, the book of savings and investment in Islamic economy, the generalities of the Islamic economic system, usury and the problems of the present age, money and monetary systems, the philosophy of Islamic economics and usury.
Structure and Content
The book consists of a preface, two parts and seven chapters:
- General Bourse
- Bourse and destructive behavior
- Bourse and instability
The second part: Bourse jurisprudence
- Jurisprudential foundations of Bourse
- Bourse jurisprudence assuming no destructive
behavior
- Bourse jurisprudence with the assumption of market manipulation
- Bourse jurisprudence assuming the use of confidential information
Bourse Typology
Conceptology
In this book, the word bourse and its general and specialized definitions have been collected from various dictionaries and terminological definitions of economists, and a comprehensive definition of bourse has been presented by focusing on common elements: in a short time, trading with high risk, not intending to keep, intending to profit from price fluctuations and lack of knowledge and confidence. The author has explained other financial concepts such as investment, gambling, arbitrage, risk hedging through derivative markets and has compared these terms with the concept of bourse. Explanations about bourse knowingly and unknowingly have expressed its advantages and disadvantages. (p. 73-50) The author has used the term “stock market” repeatedly and mentioned its definition from the Latin dictionary, but he does not specify at all what the Latin word equivalent to bourse is and what exactly he is talking about. As mentioned earlier, this book is the result of several articles, and the author defines bourse as stock-jobbery in the analysis of stock market transactions in the securities market based on the standards of Islamic Shariʿah, and considers it to be the Latin equivalent of Bourse.
Destructive behaviors
According to the author, destructive behavior causes disruption in the economic system. Two examples of it are market manipulation and the use of confidential information. Market manipulation means any interference in the natural course of the market that prevents fair price determination. The use of confidential information means that profit can be made by having confidential information. He has mentioned three cases of losses resulting from transactions with confidential information. (p. 75-99)
Instability in the market
Efficient market theorists believe that the stock market stabilizes the financial markets. Accordingly, the author explains that arbitrageurs (those who help the circulation of goods and money in the market) intervene by observing the price imbalance and neutralize the effect of cognitive deviations and misleading beliefs. Some economists are of the opinion that stock market activity sometimes causes price instability and abnormal fluctuations in financial markets. Inability to control herd emotions and behaviors is the main cause of extreme fluctuations. The stock market can deviate the prices from the intrinsic and fundamental value and cause a price bubble. In the rest of this chapter, the definitions of the price bubble and the classification of the types of price bubbles and how they are formed are stated, and the conclusion is reached by mentioning the common elements and the favorable and destructive effects of the price bubble are stated. (p. 101-137)
Bourse jurisprudence
Jurisprudential rules
The second part of the book, after identifying the issue, explains the concepts and jurisprudential rules that can be applied to the issue of bourse in an extensive manner. He has examined the rule of prohibition of false possessions, the rule of harm and harm, the prohibition of filth, the prohibition of impurity, the prohibition of gossip, the prohibition of collusion, the prohibition of monopolies and hoarding, the prohibition of gambling. It is not applicable, in order to establish economic order in the financial markets, it is necessary to falsify laws and prohibit some activities. In such a situation, based on the theory of the permissible area, Seyyed Mohammad Baqer Sadr, the Islamic ruler can make laws mandatory. (p. 226-219)
The assumption of no destructive behavior
It has examined the verdict of the stock market, which means short-term transactions and free from destructive behavior. The author claims that the stock market is one of the examples of buying and selling; Therefore, it is permissible in itself, and if it is within the framework of the rules and laws of Shariʿah, it is not prohibited. (p. 227)
Reasons for correctness: the applications and generalities of the verses
To prove the legitimacy of stock market, the author has relied on the applicability and generality of the holy verses. Among other things, he cited these honorable verses: " May God make the sale permissible ", [1] "Don't trust my wealth with falsehood unless you make a trade from the balance of mine." The first verse of any transaction is considered permissible if it is based on the consent of the parties and bourse is one of those types of transactions. But regarding the third verse, he argued about the implied meaning of the verse. Emphasizing the word good and the interpretation of Abi Hatim and Ibn Jarij, who defined good as the purchase of anything that benefits from it. Bourse is also a purchase with the intention of profit, so according to the word of God, this action is not prohibited. In the following, he argued three narrations to confirm the validity of short-term trading. (p. 227-232)
Problems and their Solutions
There are problems with the accuracy of bourse transactions. Among them, the bourse is an example of the lack of economic useful work and the sense of false wealth, fake transactions, gambling transactions, greedy transactions and examples of loss transactions. The author answered the problems raised in this way. It is not forbidden and therefore it is not a bad thing because in these transactions there is a Shariʿah reason, i.e. a sales contract. Also, the exchange has a value that actually exchanges part of the ownership of a company. Bourse offers services such as increasing liquidity, increasing risk-taking capacity and increasing efficiency to financial markets. Also, these transactions are real and value is exchanged that is actually part of the ownership of a company. Bourse is not gambling because it is done on real assets. But if it is on abstract property such as the stock index which cannot be collected it is like betting and gambling, and it is an example of false sense. Among the four forms of trick, only the ambiguity in the conditions and attributes of exchanges should be taken into account. If the basic information is not completely waited and clarified and is not available to the public, there is ambiguity and it will be an example of a greedy transaction. There is no harm in bourse by dividing the stock market into informed and rational and uninformed and imitative. By promoting the bourse, he consciously prevented the entry of the second category, which causes large-scale losses, to the financial markets. (p. 250-233)
Assumption of market manipulation
In this part of the book, all kinds of manipulations and its jurisprudence have been examined. Bourse by manipulating the market has a relationship between the public and the private. The main focus of market manipulation is on deceiving traders. Therefore, the titles of grooming and pride and impurity can be applied to many methods of manipulation. Manipulation methods such as creating artificial prosperity and creating false price increases, placing orders without the intention of making a transaction with the intention of deceiving market participants, publishing false and misleading news and information, preventing the public release of important information that affects the price. The author's contention is that market manipulation is compatible with jurisprudential titles such as embezzlement in transactions, sham transactions, hoarding and monopoly, the rule of harmlessness, collusion, and the rule of common sense, and as a result proves the impermissibility of this act. At the end, Seyyed Mohammad Baqer Sadr has mentioned the theory of Permissible area. In some cases, the Shariʿah prohibition of some market manipulation methods may not be accepted, but in order to create economic order in the financial markets, it is necessary to establish rules and regulations. According to the theory of permissible area, the Islamic ruler can issue mandatory orders. (p. 251-268)
The assumption of using confidential information
The author has adapted the use of confidential information to some jurisprudential topics and cited confidential information as examples of theft and illegal possession of real and intellectual property, betrayal of trust, reconciliation in a transaction, reconciliation in a transaction, traditions prohibiting the perception of fraud, embezzlement in a transaction, and loss and has introduced harm in the market and as a result has considered it as an illegitimate act. (p. 273-287)
Critical Review and evaluation of the book
In the thematic section, the author has wasted more than necessary and the prolongation is completely obvious and boring. According to the book's analytical reporting approach, collecting definitions from different dictionaries and different economists and divisions, not only has no effect on understanding the subject; rather, it causes confusion in the mind of the audience. Although the author has tried to collect common elements to reach a comprehensive definition, he has not been able to identify and explain the issue or at least he has been unable to understand it. The author does not adhere to the presented comprehensive definition and in different parts of the book he states different criteria for its realization. Sometimes three (p. 32) and sometimes five criteria and sometimes more (p. 72)! Sometimes it has a negative meaning (p. 67) and sometimes it has a general meaning and interprets it as knowingly and unknowingly playing stock market (p. 56). In the titles of this chapter, the author mentions bourse along with destructive behaviors, which is considered to be the cause of these destructive behaviors. However, these destructive behaviors are only carried out by some market players. As a result, the stock market does not necessarily have a negative result for the economic system. In fact, the main axis of the book is destructive behavior in the market and has nothing to do with stock market. As in the second part and the expression of the jurisprudential ruling, price manipulation and secret information have been taken into consideration. Finally, it is not clear what truth he wrote about. It is believed that one of the reasons for these ambiguities is that the book was a compilation of various essays. By referring to the analysis of bourse in the securities market based on Islamic Shariʿah standards, it is clear that what the author means by stock market is the Latin Word Bourse. In the jurisprudential ruling section, the argument is based on the verse " If I had known the unseen, I would have abundantly done good ". [2] It is not correct for the authenticity of stock market. Interpreting material wealth to mean that the Holy Prophet (PBUH) used to gamble on the stock market is not proven, but it was not conventional at that time either. At that time, trade was in the form of buying goods from one land and transferring and selling them in another land. The author has examined each of the rules in detail and collected verses, narrations, and rational evidences. In addition, he has mentioned different opinions of scholars and experts. Although the expression of jurisprudential rules was necessary and the goal of the writer; But this amount of extension and detail is not necessary. The audience of books with minor specialized topics is only in search of understanding and solving the same problem. It was appropriate that it was enough to generalize and quote the popular opinion and refer the details to extensive books. As the author has explained this theory very briefly and usefully in the discussion of permissible area (p. 223) and has avoided prolonging it.