The author, who is chief economist at the Banker's Equity Limited, an interest-free institution in Pakistan, earned his Ph.D. in 1983 from Boston University. This book, a revised version of his doctoral dissertation accepted at that university, is the first publication sponsored by the International Association for Islamic Economics in collaboration with the Islamic Foundation. The study contains important lessons for both interest-bearing and the interest-free Islamic societies. Theoreticians and practitioners in finance can equally benefit from this timely publication. It is therefore a very useful addition to the literature in Islamic economics and in the "signalling theory" in finance, which are both new and fast growing areas of study.