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Determination of Profit and Loss Sharing Ratios in Interest-free Business Finance العوامل المحدِّدة لنسب المشاركة في الربح والخسارة

Author

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  • Zubair Hasan

    (Associate Professor of Economics, Zakir Husain College, University of Delhi, India)

Abstract

Current models of profit-and-loss-sharing (PLS) financing assume that the ratio in which profits are shared may be different from the ratio the financier's capital bears to the total capital of the firm, which is the ratio in which losses must be shared. This can be better justified as a growth promoting policy than as an instrument for ensuring distributive justice. In a system where interest and PLS financing co-exist, the aggregate profit-sharing ratio is a function of the overall rate of return on investment, rate of interest, degree of leverage, and risk premium. PLS financing is more profitable to financiers in the long run than interest financing. تفترض النماذج الحالية للمشاركة جواز اختلاف نسبة اقتسام الربح، عن نسبة تمويل رأس المال التي هي نفسها نسبة توزيع الخسائر. وهذا الاختلاف بين النسبتين تمليه الرغبة في تشجيع النمو أكثر مما تمليه اعتبارات العدالة التوزيعية، وبخاصة في المنشآت الحديثة التي لا يديرها مالكوها. وفي اقتصاد يقوم فيه التمويل بالمشاركة إلى جانب التمويل بالفائدة، فإن نسبة اقتسام الربح على المستوى الكلي للاقتصاد هي دالة للمعدل الكلي للفائدة على الاستثمار، ولمعدل الفائدة، ولنسبة التمويل إلى رأس المال المشارك، ولعلاوة المخاطرة. وينتظر أن يكون التمويل بالمشاركة في الربح والخسارة أكثر ربحية بالنسبة للممولين في المدى الطويل من التمويل القائم على الفائدة.

Suggested Citation

  • Zubair Hasan, 1985. "Determination of Profit and Loss Sharing Ratios in Interest-free Business Finance العوامل المحدِّدة لنسب المشاركة في الربح والخسارة," Journal of Research in Islamic Economics, King Abdulaziz University, Islamic Economics Institute., vol. 3(1), pages 13-29, January.
    • Handle: RePEc:abd:crieja:v:3:y:1985:i:1:no:2:p:13-29
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    Citations

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    Cited by:

    1. Hechem Ajmi & Salina Kassim & Hassanuddeen Abdul Aziz & Walid Mansour, 2019. "A Literature Review of Financial Contracting Theory from the Islamic and Conventional Overviews: Contributions, Gaps, and Perspectives استعراض أدبيات نظرية التعاقد المالي من المنظور الإسلامي والتقليدي," Journal of King Abdulaziz University: Islamic Economics, King Abdulaziz University, Islamic Economics Institute., vol. 32(2), pages 25-42, January.
    2. Hasan, Zubair, 1991. "Comments on Mohsin S. Khan and Abbas Mirakhor, The Financial System and Monetary Policy in an Islamic Economy," MPRA Paper 3183, University Library of Munich, Germany.
    3. Shamim Ahmad Siddiqui, 2008. "An Evaluation of Research on Monetary Policy and Stability of the Islamic Economic system تقييم الأبحاث المتعلقة بالسياسة والاستقرار المالي لنظام الاقتصاد الإسلامي," Papers and books based on the proceedings of the Conferences organized by the Islamic Economics Institute, KAAU. 51, King Abdulaziz University, Islamic Economics Institute..
    4. Ali F. Darrat & Abdel-Hameed M. Bashir, 2000. "Modeling Monetary Control in an Interest- Free Economy إدارة النقود في اقتصاد خال من الفائدة," Journal of King Abdulaziz University: Islamic Economics, King Abdulaziz University, Islamic Economics Institute., vol. 12(1), pages 3-19, January.
    5. Zubair Hasan, 1991. "Mohsin S. Khan and Abbas Mirakhor: The Financial System and Monetary Policy in an Islamic Economy, Comment: محسن س. خان وعباس ميراخور: النظام المالي والسياسة النقدية في اقتصاد إسلامي ، تعليق: زبير حسن," Journal of King Abdulaziz University: Islamic Economics, King Abdulaziz University, Islamic Economics Institute., vol. 3(1), pages 83-91, January.
    6. Zubair Hasan, 2016. "PLS Finance and Monetary Policy: A New Measure Mooted," Journal of Reviews on Global Economics, Lifescience Global, vol. 5, pages 288-297.
    7. Giorgio Gomel & Angelo Cicogna & Domenico De Falco & Marco Valerio Della Penna & Lorenzo Di Bona De Sarzana & Angela Di Maria & Patrizia Di Natale & Alessandra Freni & Sergio Masciantonio & Giacomo Od, 2010. "Islamic finance and conventional financial systems. Market trends, supervisory perspectives and implications for central banking activity," Questioni di Economia e Finanza (Occasional Papers) 73, Bank of Italy, Economic Research and International Relations Area.
    8. Hasan, Zubair, 2016. "PLS finance and monetary policy: a new measure mooted," MPRA Paper 72898, University Library of Munich, Germany, revised Jul 2016.
    9. Hasan, Zubair, 2009. "Profit sharing ratios in mudaraba contract revisited," MPRA Paper 21843, University Library of Munich, Germany, revised 2010.

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