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Some Implications of Debt versus Equity-Based Financing in the Backdrop of Financial Crises بعض آثار الديون مقابل التمويل القائم على الإنصاف في خلفية الأزمات المالية

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  • Hayat Khan

    (University of Melbourne)

Abstract

Islamic banking and finance has its roots in the prohibition of Riba (which includes interest on loans and the sale of debt on discount), gharar (contractual uncertainty( )) and maysir (which includes gambling). These prohibitions (i) imply a ban on money generating money; (ii) require that any return on money must come from participation in real economic activities and (iii) restricts trade to items with property rights at initiation, which are building blocks of the conventional financial architecture. An alternative, based on the principles of Islamic finance, is widely referred to as equity-based financing where the underlying principal contracts operate under the equitable norm of risk-sharing. --

Suggested Citation

  • Hayat Khan, 2015. "Some Implications of Debt versus Equity-Based Financing in the Backdrop of Financial Crises بعض آثار الديون مقابل التمويل القائم على الإنصاف في خلفية الأزمات المالية," Journal of King Abdulaziz University: Islamic Economics, King Abdulaziz University, Islamic Economics Institute., vol. 28(1), pages 165-180, January.
    • Handle: RePEc:abd:kauiea:v:28:y:2015:i:1:no:7:p:165-180
    DOI: 10.4197/Islec.28-1.7
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    References listed on IDEAS

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    1. Tahir, Sayyid, 2009. "Islamic Finance – Undergraduate Education," Islamic Economic Studies, The Islamic Research and Training Institute (IRTI), vol. 16, pages 1-29.
    2. Shiller, Robert J. & Wojakowski, Rafał M. & Ebrahim, M. Shahid & Shackleton, Mark B., 2013. "Mitigating financial fragility with Continuous Workout Mortgages," Journal of Economic Behavior & Organization, Elsevier, vol. 85(C), pages 269-285.
    3. Martin H. Wolfson, 2002. "Minsky’s Theory of Financial Crises in a Global Context," Journal of Economic Issues, Taylor & Francis Journals, vol. 36(2), pages 393-400, June.
    4. Shiller Robert J., 2009. "Policies to Deal with the Implosion in the Mortgage Market," The B.E. Journal of Economic Analysis & Policy, De Gruyter, vol. 9(3), pages 1-25, March.
    5. Nauman Ejaz & Hayat Khan, 2014. "The Underlying Cause of the Global Financial Crisis: An Islamic Perspective," Economic Papers, The Economic Society of Australia, vol. 33(1), pages 45-54, March.
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    Cited by:

    1. Stapah @ Salleh, Maisyarah & Possumah, Bayu Taufiq & Ahmat, Nizam, 2021. "The Impact of Financing Contracts on the Profitability of Islamic Banks," Jurnal Ekonomi Malaysia, Faculty of Economics and Business, Universiti Kebangsaan Malaysia, vol. 55(3), pages 149-164.

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