DOMAINS AND MOTIVES OF MUSHARAKAH SPUR IN THE ISLAMIC BANKING INDUSTRY OF PAKISTAN

Muhammad Nouman (), Karim Ullah () and Shafiullah Jan
Additional contact information
Muhammad Nouman: Institute of Business and Management Sciences (IBMS), The University of Agriculture Peshawar, Pakistan
Karim Ullah: ��Institute of Management Sciences Peshawar, Pakistan
Shafiullah Jan: ��Institute of Management Sciences Peshawar, Pakistan

The Singapore Economic Review (SER), 2022, vol. 67, issue 01, 381-409

Abstract: Participatory financing schemes, including Musharakah and Mudarabah, are theoretically claimed to be the ideal modes of Islamic financing, but their practice is restrained by several factors. That is why Islamic banks have a consistent tendency to avoid participatory financing on the assets side throughout the world. However, recently this trend has started changing in Pakistan and Indonesia where the share of participatory finance has raised significantly in the financing portfolio of Islamic banks. The present paper explores this recent spur of participatory finance in Pakistan in terms of its domains of applications and the responsible factors. The findings lead to a novel posteriori framework which shows that the shift toward participatory financing is primarily characterized by increase in working capital financing and commodity operations financing through Musharakah mode Islamic banks. Moreover, five factors contribute to the spur of participatory financing including: (i) introducing varieties in Musharakah, (ii) enhanced applicability, (iii) high volume projects, (iv) government interventions, and (v) regulator’s role. The framework can significantly advance understanding with respect to the implementation theory of participation financing within Islamic banking and related Shariah compliance and regulation.

Keywords: Diminishing Musharakah; Islamic banking; Musharakah; qualitative content analysis; Pakistan; participatory financing; running Musharakah (search for similar items in EconPapers)
Date: 2022
References: Add references at CitEc
Citations:

Downloads: (external link)
http://www.worldscientific.com/doi/abs/10.1142/S0217590819500620
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:wsi:serxxx:v:67:y:2022:i:01:n:s0217590819500620

Ordering information: This journal article can be ordered from

DOI: 10.1142/S0217590819500620

Access Statistics for this article

The Singapore Economic Review (SER) is currently edited by Euston Quah

More articles in The Singapore Economic Review (SER) from World Scientific Publishing Co. Pte. Ltd.
Bibliographic data for series maintained by Tai Tone Lim ().