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An Islamic Finance Perspective of Crowdfunding and Peer-To-Peer (P2P) Lending

In: FinTech in Islamic Financial Institutions

Author

Listed:
  • M. Kabir Hassan

    (University of New)

  • Mustafa Raza Rabbani

    (University of Bahrain)

  • Shahnawaz Khan

    (Bahrain Polytechnic)

  • Mahmood Asad Moh’d Ali

    (University of Bahrain)

Abstract

The present chapter makes an honest attempt to provide a comprehensive overview of sharia compliance of the disruptive innovation called Crowdfunding and P2P lending. Islamic finance startups are comparatively small and high-risk investment avenues which makes it not so attractive for the conventional banks and finance providers to provide finance to them. Crowdfunding and P2P lending have merged as a savior for them as these startups can obtain finance without too much documentary formalities. The chapter explores whether these innovative financing models complies to the strict norms of the sharia or not? It takes qualitative route to make a conclusion based on the extensive review of literature and views of the sharia scholars. The chapter concludes that although crowdfunding looks more connected to the profit and loss sharing (PLS) methods of Islamic finance whereas, P2P lending needs a serious attention from the sharia scholars to further investigate its sharia compliance. The chapter is expected to help the future researchers in further exploring the sharia compliance of the innovative Islamic financial services such as P2P lending and Crowdfunding.

Suggested Citation

  • M. Kabir Hassan & Mustafa Raza Rabbani & Shahnawaz Khan & Mahmood Asad Moh’d Ali, 2022. "An Islamic Finance Perspective of Crowdfunding and Peer-To-Peer (P2P) Lending," Springer Books, in: M. Kabir Hassan & Mustafa Raza Rabbani & Mamunur Rashid (ed.), FinTech in Islamic Financial Institutions, pages 263-277, Springer.
    • Handle: RePEc:spr:sprchp:978-3-031-14941-2_13
    DOI: 10.1007/978-3-031-14941-2_13
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    More about this item

    Keywords

    Fintech; Sharia compliance; Crowdfunding; P2P lending; SME;
    All these keywords.

    JEL classification:

    • D47 - Microeconomics - - Market Structure, Pricing, and Design - - - Market Design
    • D82 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Asymmetric and Private Information; Mechanism Design
    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages
    • G24 - Financial Economics - - Financial Institutions and Services - - - Investment Banking; Venture Capital; Brokerage
    • Z11 - Other Special Topics - - Cultural Economics - - - Economics of the Arts and Literature

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