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Determination of Profit and Loss Sharing Ratios in Interest-Free Business Finance


  • Hasan, Zubair


This paper discusses how profit and loss sharing ratios will be determined at the micro and micro levels in an interest free system of financing business operating side by side of an interest based conventional financing.It shows that leverage magnification of return on owners' equity is also available under the Islamic financing. It argues that for the bank Islamic finance may be more profitable than conventional financing

Suggested Citation

  • Hasan, Zubair, 1985. "Determination of Profit and Loss Sharing Ratios in Interest-Free Business Finance," MPRA Paper 3013, University Library of Munich, Germany.
  • Handle: RePEc:pra:mprapa:3013

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    Cited by:

    1. 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.
    2. Hasan, Zubair, 2012. "Incentive-compatible sukukmusharkah for private sector funding: Comment," MPRA Paper 41916, University Library of Munich, Germany.
    3. 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.
    4. Hasan, Zubair Hasan, 2014. "The recent turmoil and monetary policy in a dual financial system with Islamic perspective," MPRA Paper 57133, University Library of Munich, Germany.
    5. Kaouther Jouaber & Meryem Mehri, 2012. "A Theory of Profit Sharing Ratio under Adverse Selection: The Case of Islamic Venture Capital," Post-Print hal-01525795, HAL.
    6. 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.
    7. Hasan, Zubair, 2008. "Islamic Banks: Profit sharing, equity, leverage lure and credit control," MPRA Paper 11737, University Library of Munich, Germany, revised Nov 2008.
    8. repec:dau:papers:123456789/9551 is not listed on IDEAS
    9. Shamim Ahmad Siddiqui شميم أحمد صديقي, 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..
    10. Hasan, Zubair, 2009. "Profit sharing ratios in mudaraba contract revisited," MPRA Paper 21843, University Library of Munich, Germany, revised 2010.

    More about this item


    Profit sharing; macro level model; mico model; leverage effects; relative profitability;

    JEL classification:

    • E10 - Macroeconomics and Monetary Economics - - General Aggregative Models - - - General
    • D49 - Microeconomics - - Market Structure, Pricing, and Design - - - Other
    • D40 - Microeconomics - - Market Structure, Pricing, and Design - - - General


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