Development Of Mudarabah Instruments: Understanding Their Profitability, Securitization And Negotiability Aspects
AbstractThis paper attempts to examine the securitization, negotiability and profitability aspects of three types of muèOErabah instruments; namely, asset-enfaced muèOErabah instruments, currency-enfaced muèOErabah instruments representing monetary contributions and currency-enfaced muèOErabah instruments representing real assets. This paper begins with a distinction between ribOE (usury) and profit and concludes that an exchange of currencyenfaced muèOErabah instruments in varying amounts entails ribOE while an exchange of asset-enfaced muèOErabah instruments will generate legitimate profits. The current practice is to issue currency-enfaced muèOErabah instruments but treat them as asset-enfaced muèOErabah instruments. This position is analyzed and policy implications are drawn for future development of muèOErabah instruments.
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Bibliographic InfoArticle provided by IIUM Journal of Economis and Management in its journal IIUM Journal of Economics and Management.
Volume (Year): 9 (2001)
Issue (Month): 2 (December)
MuèOErabah instruments; Islamic finance; Financial instruments;
Find related papers by JEL classification:
- G10 - Financial Economics - - General Financial Markets - - - General (includes Measurement and Data)
- P43 - Economic Systems - - Other Economic Systems - - - Finance; Public Finance
- Z12 - Other Special Topics - - Cultural Economics - - - Religion
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