The Role of Time in Muslims’ Market Efficiency
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Abstract
Economic theories consider asymmetric information as a major factor of market failure. Usually the producer has more information about the production quality than the consumer, very much like laborers’ more information in regard to their skill and efficiency as compared to their employers. Thus, in the conventional economic literature especially in neoclassical economic thought, measures have been taken to prevent market failure. This is discussed in the fields of "Economics of Information" and "Contract Theory".
In the Islamic School of Economics, therefore, various jurisprudential issues related to contracts are included, which prove the important role of the principle of symmetric information in that area, with its pertinent strategies formulated to provide accurate information for the market. Consequently, the contractors should be in touch with the necessary amount of information about the transaction to guarantee a sound and safe one. One of the main components of information is "time".
This paper shows the pivotal status of time that can result in Muslims’ market efficiency so much so that its absence can cause the cancelation of the contract and market failure. In fact one could assert that "time" as an effective factor in symmetric information, indicates the high status of Islamic economics view which is highly neglected in other economic schools. Muslims’ market efficiency is therefore achieved within ethical norms and avoids any kind of efficiency loss or market failure.
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