EconPapers    
Economics at your fingertips  
 

Can an Islamic Model of Housing Finance Cooperative Elevate the Economic Status of the Underprivileged?

M. Shahid Ebrahim ()

Post-Print from HAL

Abstract: A formal home loan is onerous to subprime borrowers in efficient markets. This can deter homeownership for financially strapped individuals, leading to a market failure. This paper proposes a special form of cooperative mortgage financing (practiced in Oman) to overcome this market failure. We integrate the literature of Mortgage Design with that of informal savings schemes (i.e., ROSCAs/ ASCRAs) to illustrate that this mode of financing dissipates credit risk better than the formal mode of financing. It is also resilient to volatility of interest rates and allows prepayments without any additional charges. Finally, we verify the assertions of Besley et al. (1994), and Hart and Moore (1998) that cooperative mortgages are to formal mortgages in special cases.

Keywords: C63 (Computational Techniques); I31 (Welfare and Poverty Basic Needs); O17 (Formal and Informal Sectors; Institutional Arrangements); P13 (Cooperative Enterprises); ASCRA; Asset Bubble; Mutual Bank; Inflation; Mortgage Design; and ROSCA; G21 (Banks; Mortgages); G32 (Financing Policy; Capital and Ownership Structures) (search for similar items in EconPapers)
Date: 2009-08-12
Note: View the original document on HAL open archive server: https://hal.science/hal-00723634
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (17)

Published in Journal of Economic Behavior and Organization, 2009, 72 (3), pp.864. ⟨10.1016/j.jebo.2009.08.002⟩

Downloads: (external link)
https://hal.science/hal-00723634/document (application/pdf)

Related works:
Journal Article: Can an Islamic model of housing finance cooperative elevate the economic status of the underprivileged? (2009) Downloads
Working Paper: Can an Islamic Model of Housing Finance Cooperative Elevate the Economic Status of the Underprivileged? (2008) Downloads
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:hal:journl:hal-00723634

DOI: 10.1016/j.jebo.2009.08.002

Access Statistics for this paper

More papers in Post-Print from HAL
Bibliographic data for series maintained by CCSD ().

 
Page updated 2025-03-19
Handle: RePEc:hal:journl:hal-00723634