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A critique of the Diminishing Balance Method of Islamic home financing - Response

Author

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  • Hasan, Zubair

Abstract

This paper responds to the criticism of the Zubair Diminishing Balance model for Islamic home financing that Ahmad Kameel Meera published in the ISRA Journal. The response argues that most of the comments of Meera are frivolous and misplaced. It reiterates that the ZDBM is much different from other models; it is cheaper for the customer without being costlier to the bank, more efficient in resource allocation and improves liquidity in the financial system. However, the mathematical appendix is a positive contribution of Meera's paper.

Suggested Citation

  • Hasan, Zubair, 2013. "A critique of the Diminishing Balance Method of Islamic home financing - Response," MPRA Paper 43684, University Library of Munich, Germany.
  • Handle: RePEc:pra:mprapa:43684
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    File URL: https://mpra.ub.uni-muenchen.de/43705/1/MPRA_paper_43705.pdf
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    References listed on IDEAS

    as
    1. Hasan, Zubair, 2012. "Excel formula and Islamic norms for home financing," MPRA Paper 42835, University Library of Munich, Germany.
    2. Matthew Chambers & Carlos Garriga & Don E. Schlagenhauf, 2007. "Mortgage contracts and housing tenure decisions," Working Papers 2007-040, Federal Reserve Bank of St. Louis.
    Full references (including those not matched with items on IDEAS)

    More about this item

    Keywords

    Islamic home financing; conventional model; BBA; MMP; ZDBM; Segmental murabahah;

    JEL classification:

    • G20 - Financial Economics - - Financial Institutions and Services - - - General
    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages

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