Investigating the Causes of Non-Acceptance and Innovation Diffusion in Islamic Financial Instruments in Iran's Capital Market

Document Type : Paper

Authors
Meysam Bayat 1
Mohammad Talebi 2
Hamed Ghoddoosi 3
1 Ph.D. Student of Financial Management, Faculty of Islamic Studies and Management, Imam Sadiq University
2 Assistant Professor at Department of Finance, Faculty of Islamic Education and Management, Imam Sadiq University, Tehran, Iran.
3 Assistant Professor at Stevens Institute of Technology, New Jersey, USA
10.30497/ifr.2018.2237
Abstract
In this paper, after a quick review of a summary of the financial innovation diffusion literature, with an emphasis on modern Islamic financial instruments, we address the process of Islamic financial innovation diffusion in Iran's capital market, as well as focusing on the categorization of the barriers of promotion and diffusion of modern Islamic financial instruments with providing some relevant examples.  Then, according to the literature of adopting innovations and the author's practical experiences, we examine how to consider the Islamic Jurisprudence and Sharia viewpoint on the structure, components, and effects of a new financial instrument in the capital market. In this paper, we have emphasized the local design or institutional approach in Islamic financial innovations which is paid less attention by Islamic financial scholars and financial operations managers. The presented approach has some differences from the current Sharia Compliance approach in Iran's Islamic capital market, although it may include methods of eliminating jurisprudential contradictions in conventional financial instruments.
Keywords
Financial Innovations
Promotion and Acceptance of Innovation
Native Design Approach
Adaptive Approach to Sharia
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  • Receive Date 05 August 2016
  • Accept Date 08 January 2017