Portfolio Determination of A Zero-Interest Financial System Entity

Shafi A. Khaled and A. Wahhab Khandker
Additional contact information
Shafi A. Khaled: Metropolitan State University
A. Wahhab Khandker: University of Wisconsin - La Crosse,

Islamic Economic Studies, 2014, vol. 22-1, 217-232

Abstract: Beginning in the 1930s and increasing significantly post-colonialism, some Muslims scholars have wondered about the divine edict of interest-free nominal sector and how to realize it in the context of modern mass deposit institution and wide, concentrated financing demand for trade, entrepreneurship and consumption ends. This undertaking has faced challenges posed by the interest-based nominal sector. Evidence has mounted about the limitations of interest-free banks in the way they are organized and, of late, the largely a theoretical way they do business and their business and political operative environment. For explaining the phenomenon and predicting events, a risk-discounted, expected profit objective function produces rules for inter and intra-sectoral allocation of funds. The nonhomogeneity of mark-up and profit-loss-sharing products leads to adopting the average sizes of outlays in the two sectors as the choice variables. Identifying allocation rules for resources will benefit empirical analysis, banking policy and the central bank’s monitoring effor.

Keywords: Islamic Finance; Interest; Ribā; Diversification; Portfolio; Risk Return; Mushārakah; Muḍārabah; Mur (search for similar items in EconPapers)
Date: 2014
References: View references in EconPapers View complete reference list from CitEc
Citations:

Downloads: (external link)
http://www.irti.org/English/Research/Documents/IES/008.pdf Full text

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:ris:isecst:0008

Access Statistics for this article

Islamic Economic Studies is currently edited by Anis Ben Khedher

More articles in Islamic Economic Studies from The Islamic Research and Training Institute (IRTI) Contact information at EDIRC.
Bibliographic data for series maintained by IRTI Staff ().