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Islamic home financing and ownership transfer to the customer: Models compared


  • Hasan, Zubair


In my latest article on Islamic home financing models in the ISRA Journal June 2013, I had shown that the Zubair Diminishing Balance Model (ZDBM) is free of return compounding and the transfer of ownership to the customer perfectly matches the payments’ rate; the two norms Islamic models must meet. It is satisfying to note that Nabil in the same issue of the journal takes up these issues in a comprehensive and tightly argued conceptual paper and convincingly vindicates my position on the compounding issue. However, he argues that the transfer of ownership in the ZDBM also does not meet the ideal even as it is closer to the norm than other constructs. The objective of this brief note is to clarify my position on this latter issue.

Suggested Citation

  • Hasan, Zubair, 2014. "Islamic home financing and ownership transfer to the customer: Models compared," MPRA Paper 53105, University Library of Munich, Germany.
  • Handle: RePEc:pra:mprapa:53105

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    References listed on IDEAS

    1. Berlemann, Michael & Wesselhöft, Jan-Erik, 2012. "Estimating Aggregate Capital Stocks Using the Perpetual Inventory Method – New Empirical Evidence for 103 Countries –," Working Paper 125/2012, Helmut Schmidt University, Hamburg.
    2. Horioka, Charles Yuji, 2006. "The causes of Japan's `lost decade': The role of household consumption," Japan and the World Economy, Elsevier, vol. 18(4), pages 378-400, December.
    3. Takeo Hoshi & Anil K. Kashyap, 2004. "Japan's Financial Crisis and Economic Stagnation," Journal of Economic Perspectives, American Economic Association, vol. 18(1), pages 3-26, Winter.
    4. Adalmir Marquetti & Eduardo Maldonado Filho & Vladimir Lautert, 2010. "The Profit Rate in Brazil, 1953-2003," Review of Radical Political Economics, Union for Radical Political Economics, vol. 42(4), pages 485-504, December.
    5. Weisskopf, Thomas E, 1979. "Marxian Crisis Theory and the Rate of Profit in the Postwar U.S. Economy," Cambridge Journal of Economics, Oxford University Press, vol. 3(4), pages 341-378, December.
    6. Rudy Fichtenbaum, 1988. "'Business Cycles,' Turnover and the Rate of Profit: An Empirical Test of Marxian Crisis Theory," Eastern Economic Journal, Eastern Economic Association, vol. 14(3), pages 221-228, Jul-Sep.
    7. Freeman, Alan, 2009. "What makes the US Profit Rate Fall?," MPRA Paper 14147, University Library of Munich, Germany.
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    More about this item


    Shari’ah norms; home financing; ZDBM; MMP; Segmental murabahah;

    JEL classification:

    • G2 - Financial Economics - - Financial Institutions and Services
    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages

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