Commenced in January 2007
Paper Count: 30127
A Multi-Agent Smart E-Market Design at Work for Shariah Compliant Islamic Banking
Authors: Wafa Ghonaim
Abstract:Though quite fast on growth, Islamic financing at large, and its diverse instruments, is a controversial matter among scholars. This is evident from the ongoing debates on its Shariah compliance. Arguments, however, are inciting doubts and concerns among clients about its credibility, which is harming this lucrative sector. The work here investigates, particularly, some issues related to the Tawarruq instrument. The work examines the issues of linking Murabaha and Wakala contracts, the reselling of commodities to same traders, and the transfer of ownerships. The work affirms that a multi-agent smart electronic market design would facilitate Shariah compliance. The smart market exploits the rational decision-making capabilities of autonomous proxy agents that enable the clients, traders, brokers, and the bank buy and sell commodities, and manage transactions and cash flow. The smart electronic market design delivers desirable qualities that terminate the need for Wakala contracts and the reselling of commodities to the same traders. It also resolves the ownership transfer issues by allowing stakeholders to trade independently. The bank administers the smart electronic market and assures reliability of trades, transactions and cash flow. A multi-agent simulation is presented to validate the concept and processes. We anticipate that the multi-agent smart electronic market design would deliver Shariah compliance of personal financing to the aspiration of scholars, banks, traders and potential clients.
Digital Object Identifier (DOI): doi.org/10.5281/zenodo.1315553Procedia APA BibTeX Chicago EndNote Harvard JSON MLA RIS XML ISO 690 PDF Downloads 452
 The Muslim World League Journal, "Resolutions of the Islamic Fiqh Council," The Muslim World League, Makkah - Saudi Arabia, 1977-2006.
 Ethica Institute of Islamic Finance (Sameer Hasan), "Is Tawarruq Really Islamic Finance?," 2014. http://www.prweb.com/releases/Is_Tawarruq/Really_Islamic_Finance/prweb11950818.htm.
 Practical Law, "Tawarruq (Reverse Murabaha)," 2016, http://uk.practicallaw.com/5-367-4016?service=finance.
 S. Al Shalhoob, "Instalment Sales in Islamic Law: Thoery and Practice," University of Edinburgh, 2007.
 Harvard-LSE Workshop, "TAWARRUQ: A Methodological Issue in Shari`a-Compliant Finance," London School of Economics, London, UK, London, 2007.
 A. Samad, "Commodity Murabaha," AlHuda Centre of Islamic Banking and Economic (CIBE), 2011. B. Hayes-Roth, “Architectural Foundations for Real-Time Performance in Intelligent Agents” Real-Time Systems, 1990, Vol.2, pp. 99-125.
 D. Parkes, "Iterative Combinatorial Auctions," in Combinatorial Auctions, MIT Press, 2006, pp. 41-77.
 C. Boutilier and H. Hoos, "Bidding languages for combinatorial auctions," in Proceedings of the 17th International Joint Conference on Artificial Intelligence, 2001.
 P. Wurman, W. Walsh and M. Wellman, " Flexible double auctions for electronic commerce: Theory and implementation," Decision Support Systems, vol. 24, p. 17−27, 1998.
 J. F. Moore, The Death of Competition: Leadership and Strategy in the Age of Business Ecosystems, New York: Harper Business, 1996.
 A. Roth, "The Art of Designing Markets," Harvard Business Review, vol. 85, no. 10, p. 118–126, 2007.
 W. Vickrey, "Counter speculation, auctions and competitive sealed tenders," Finance, vol. 19, p. 8-37, 1961.
 E. H. Clarke, "Multipart pricing of public goods," Public Choice, vol. 11, pp. 17-33, 1971.
 T. Groves, "Incentives in teams," Econometrica, vol. 41, pp. 617-631, 1973.
 B. Edelman, M. Ostrovsky and M. Schwartz, "Internet Advertising and the Generalized Second Price Auction: Selling Billions of Dollars Worth of Keywords," American Economic Review, vol. 97, no. 1, pp. 242-259, March 2007.
 N. Nisan, M. Schapira, G. Valiant and Z. Aviv, "Best-Response Auction," in Proceedings of the 12th ACM conference on Electronic commerce, 2011.
 R. Cavallo, D. C. Parkes, A. I. Juda, A. Kirsch, A. Kulesza, S. Lahaie and B. Lubin, "TBBL: A Tree-Based Bidding Language for Iterative Combinatorial Exchanges," Multidisciplinary Workshop on Advances in Preference Handling (IJCAI), 2005.
 Ghonaim, W., Ghenniwa, H., & Shen, W. (October 13-16, 2013). Towards A Rule-Based Bidding Language: Promoting the Free Expression of Rational Conduct for Ecosystem Friendly e-Markets. the IEEE International Conference on Systems, Man, and Cybernetics: Collaborative Technologies and Applications (HM-13: SMC:Human-Machine), (pp. 4688-4693). Manchester, UK.
 Ghonaim, W., Ghenniwa, H., & Shen, W. (2013). Towards a Sustainable Smart e-Marketplace - A Stable, Efficient and Responsive Smart Exchange with Strategic Conduct. the Proceedings of the 5th International Conference on Agents and Artificial Intelligence (ICAART 2013), (pp. 338 - 345). Barcelona, Spain.
 Accounting and Auditing Organization for Islamic Financial Institutions, (Online). Available: http://www.aaoifi.com/. (Accessed 20 October 2017).