INVESTMENT AND INCOME DISTRIBUTION PATTERN UNDER MUSHARKA FINANCE: The Uncertainly Case

Shamim Ahmad Siddiqui and Asad Zaman

Pakistan Journal of Applied Economics, 1989, vol. 8, issue 1, 31-71

Abstract: In the present study we extend the model presented in Siddiqui and Zaman [The Certainty Case (1989)] in order to include the element of uncertainty. We find total incestment higher when the mode of finance is close to Musharka finance. The income distribution pattern is favourable to providers of funds when output (profit) is higher and vise versa. These results have profiund implications for Islamic banking, for theyreveal that profits of banks and depositors would be higher during booms at the expenseof producers. On the other hand, any shock would be shared by a larger group of economic agents.

Date: 1989
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