EconPapers    
Economics at your fingertips  
 

The potentials ofmushārakah mutanāqisahfor Islamic housing finance

Edib Smolo and M. Kabir Hassan

International Journal of Islamic and Middle Eastern Finance and Management, 2011, vol. 4, issue 3, 237-258

Abstract: Purpose - The main purpose of this paper is to provide a comprehensive review ofmushārakah mutanāqisah(MM; diminishing partnership) technique and its potentials for Islamic financial institutions. Design/methodology/approach - Based on an extensive literature review, this paper aims to highlight, explain and discuss the basic principles underlying implementation of MM and its distinctive features when compared to other modes of finance. Findings - Islamic banks, throughout the years, developed several modes of finance which are more or less similar to their conventional counterparts. In fact,al‐Baycbithaman al‐ājil(BBA) andmurābahahare the two instruments most commonly used by Islamic banks and financial institutions. Investment and financing through the profit and loss sharing instruments is almost nonexistent within the Islamic financial system. MM technique is an alternative financial instrument available for Islamic banks. It is a relatively new and very little used product available for Islamic banks. The paper claims that MM is more in line withShari'ahteachings and as such should be used more by Islamic financial institutions. The study indicates that MM possibly has a comparative advantage for both financier and the customer when compared with conventional loans and BBA. Research limitations/implications - As a relatively new and untested mode of finance, the paper offers a theoretical overview only. Further studies should discuss more practical issues that keep banks away from utilizing MM more efficiently. Originality/value - The comprehensive overview of the MM and underlying issue discussed in this paper is a very good foundation for further studies on the topic. It gives a clear theoretical base for practical implementation of MM.

Keywords: Islamic finance; Shari'ah‐compliant; Mushārakah mutanāqisah; Banks; Equity capital financing (search for similar items in EconPapers)
Date: 2011
References: Add references at CitEc
Citations: View citations in EconPapers (1)

Downloads: (external link)
https://www.emerald.com/insight/content/doi/10.110 ... d&utm_campaign=repec (text/html)
https://www.emerald.com/insight/content/doi/10.110 ... d&utm_campaign=repec (application/pdf)
Access to full text is restricted to subscribers

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:eme:imefmp:v:4:y:2011:i:3:p:237-258

DOI: 10.1108/17538391111166476

Access Statistics for this article

International Journal of Islamic and Middle Eastern Finance and Management is currently edited by Prof M. Kabir Hassan

More articles in International Journal of Islamic and Middle Eastern Finance and Management from Emerald Group Publishing Limited
Bibliographic data for series maintained by Emerald Support ().

 
Page updated 2024-03-31
Handle: RePEc:eme:imefmp:v:4:y:2011:i:3:p:237-258