Reading the concept of al-Gharar on the background of robo-advisory: one more step towards Halālan Ṭayyiban lifestyle

• Main Authors: Khalq, Ashraful, Muhsin, Sayyed Mohamed, Mat Jubri@Shamsuddin, Mustafa
• Format: Conference or Workshop Item
• Language: English; English; English; English
• Published: International Institute for Halal Research and Training (INHART), IIUM 2021
• Subjects: BPH Islamic Economics
• Online Access: http://irep.iium.edu.my/92216/24/92216_Reading_Concept_Al-Gharar.pdf; http://irep.iium.edu.my/92216/2/ID29_Revised_02%20certificate.pdf; http://irep.iium.edu.my/92216/4/Program%20book.pdf; http://irep.iium.edu.my/92216/3/pdf%20ppt%20presentation.pdf; http://irep.iium.edu.my/92216/

This paper examines the potential role of the robo-advisory in mitigating the magnitude of al-Gharar from al-Gharar al-Fāḥish to al-Gharar al-Yasīr and hence to contribute to the Halālan Ṭayyiban lifestyle by increasing the larger domain of Sharīʿah compliant investment opportunities. Al-Gharar, literally means uncertainty, attributed mainly to the information asymmetry and the lack of expertise in dealing with the complex financial tools with considerable sensitivity to the internal and external shocks. As a result, the investors, especially laymen, fail to read the market trend and identify the quick response of the financial assets to the eco-political developments and hence encounter al-Gharar al-Fāḥish, which nullify the Sharīʿah compliance of the deal. Robo-advisory, a mechanical advisory that uses sophisticated analytical tools and algorithm to provide financial advice at a lower cost, brings down information asymmetry to a more significant extent and its affordability, along with easy accessibility, helps lay-investors to find good asset combination. Therefore, this article finds that robo-advisory, albeit its some shortcomings, will be a good solution in dealing with al-Gharar al-Fāhish, and it has good potential in serving the Halālan Ṭayyiban lifestyle.