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Excel formula and Islamic norms for home financing


  • Hasan, Zubair


This paper is in a series of writings on Islamic home financing. It spells out certain norms Islamic banks must observe in home financing and demonstrates that the conventional model based on an Excel formula does not meet the stated norms. It may well be emphasized that in Islam the question of observing these norms arises before not after the selection of the formula: additional juristic requirements may only follow subsequently. Is it not then queer that many Islamic banks are using the formula to determine the periodic installment payments in their home financing programs? The paper finds for example the popular MMP non-compliant of the stated norms. It presents a new model and argues that the alternative is not only fully observant but is superior to MMP on some other counts as well.

Suggested Citation

  • Hasan, Zubair, 2012. "Excel formula and Islamic norms for home financing," MPRA Paper 42835, University Library of Munich, Germany.
  • Handle: RePEc:pra:mprapa:42835

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    References listed on IDEAS

    1. Hasan, Zubair, 2011. "Riba in La-riba contracts: where to turn in Islamic home financing?," MPRA Paper 35421, University Library of Munich, Germany.
    2. Hasan, Zubair, 2010. ""Islamic house financing:current models and a proposal from social perspective," MPRA Paper 31638, University Library of Munich, Germany, revised 02 Apr 2011.
    3. Hasan, Zubair, 2012. "Mortgage contracts in Islamic home finance: Musharakah Mutanaqisah program vs. Zubair diminishing balance model," MPRA Paper 39067, University Library of Munich, Germany.
    4. Matthew Chambers & Carlos Garriga & Don E. Schlagenhauf, 2007. "Mortgage contracts and housing tenure decisions," Working Papers 2007-040, Federal Reserve Bank of St. Louis.
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    Cited by:

    1. Hasan, Zubair, 2013. "Response to Meera’s critique of the ZDBM," MPRA Paper 43747, University Library of Munich, Germany.
    2. Hasan, Zubair, 2013. "A critique of the Diminishing Balance Method of Islamic home financing - Response," MPRA Paper 43684, University Library of Munich, Germany.

    More about this item


    Home finance; Excel amortization formula; Compounding; Islamic norms; Justice; MMP;

    JEL classification:

    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages

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