Excel formula and Islamic norms for home financing

Zubair Hasan

MPRA Paper from University Library of Munich, Germany

Abstract: 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.

Keywords: Home finance; Excel amortization formula; Compounding; Islamic norms; Justice; MMP (search for similar items in EconPapers)
JEL-codes: G21 (search for similar items in EconPapers)
Date: 2012-11-02
New Economics Papers: this item is included in nep-ara
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (2)

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