Juridical feasibility of weather derivatives using multi-stage ijtihad research method
Subject Areas : Financial engineering
mohammad
talebi
1
(Assistant Professor, Finance Group, The Faculty of Islamic Studies and Management, Imam Sadiq
(AS) University, Tehran, Iran)
mohsen
sayar
2
(Master, Finance Group, The Faculty of Islamic Studies and Management, Imam Sadiq (AS) University, Tehran, Iran)
hanieh
fadaei wahed
3
(Master student, Principles of Jurisprudence (Fiqh) and Islamic Laws group, Faculty of Theology, Alzahra University, Tehran, Iran)
Keywords: Weather derivatives, Degree of heating, Cooling degree, Risk coverage, Natural disasters in agriculture, jurisprudential study,
Abstract :
The agricultural industry, which is referred to as a mothers industry, faces many risks, which has reduced investors' willingness to invest in this industry. Some of these risks, including disaster risk, are considered to be the specific risks of this industry. Developed countries use a variety of instruments, such as weather derivatives, to cover these risks. Weather derivatives, like other derivatives used in financial markets, are based on their base assets, with the difference that the base asset in weather derivatives is the temperature index, rainfall, snowfall, and etc. This research, while reviewing the nature of the weather derivatives, has provided a juridical feasibility study for the implementation of this financial instrument. The research method used in this research is a multi-stage Ijtihadi model. The results of this research indicate that the lack of legal permission to use this instrument is due to the conflict with the principle of the prohibition of fake money and the existence of a dilemma of the underlying asset ineligibility. However fixing the drawbacks and develop Islamic financial instruments in accordance with the Imam's jurisprudence is not far from mind.
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