The impact of the Islamic rules of Liability (Daman) and Possession (Qabd) on market stability

The principle of Al Kharaj Bil Daman—"revenue is justified by liability"—is a cornerstone of Islamic jurisprudence, emphasizing that profit is only legitimate when accompanied by the risk of loss. This rule directly influences market stability by ensuring that all transactions are rooted in genuine ownership and responsibility. The strict requirement for liability and possession before selling a product fosters ethical trade, reduces speculative practices, and promotes fairness. Consequently, these rules contribute to market integrity and economic stability by aligning financial gain with moral responsibility.