Islamic finance's phenomenal growth owes to the Shariah compliant nature of its financial instruments. Shariah forbids the charging of interest (Riba) and instead promulgates risk-sharing and trade-based modes of financing. The Islamic financial industry has been subject to both critique and admiration. Critics argue that Islamic instruments (bearing debt-based structures) differ from their conventional counterparts only in legal lexicon and not in economic impact. The admirers argue that such instruments, irrespective of wider economic implications, rigorously comply with 'juristically sound' Islamic principles.

This book aims to reconcile the above dispute. It argues that the financial impact of instruments is a consequence of the way they are priced and structured. The similarity in pricing and structures is an outcome not of the underlying Islamic financial modes but of the competitive environment in which Islamic instruments compete. Even risk-sharing and trade-based Islamic structures, if implemented in such an environment, would have a financial impact similar to that of conventional instruments.

This book has a wider appeal for both academic and non-academic audiences. It can complement undergraduate and graduate courses as an additional reading on the intricacies of Islamic financial instruments and markets. For PhD students, it would help identify future research areas. To non-academics, it offers a deeper understanding regarding the working of the Islamic finance industry.

Ayesha Bhatti is an Assistant Professor at the Lahore University of Management Sciences (LUMS), Lahore, Pakistan. She is a Fellow of the Institute of Chartered Accountants of England and Wales and completed her master's degree in Applied Statistics from the University of Oxford, UK. Ayesha has been associated with the LUMS Centre for Islamic Finance since its inception in 2015 and has served as the Director of Training and Chair of the Centre. She teaches in the area of Financial and Managerial Accounting at LUMS and has written and taught several case studies in this area as well as on Islamic finance.

Saad Azmat is an Associate Professor of Finance at the Lahore University of Management Sciences (LUMS), Lahore, Pakistan. He completed his PhD in Accounting and Finance at Monash University, Australia and a master's degree in Economics from University of British Columbia, Canada. At LUMS he has served as the Associate Dean of Research, Director of PhD Program, and the Founding Chair of the Centre for Islamic Finance. He teaches courses in the area of Islamic Banking and Finance to undergraduate, master's and PhD students at LUMS.