Diminishing Musharaka Product of Islamic Banks: A Sharia’a Compliant Substitute of Term Finance

The Islamic Culture

View Publication Info
 
 
Field Value
 
Title Diminishing Musharaka Product of Islamic Banks: A Sharia’a Compliant Substitute of Term Finance
 
Creator Ahmad, Muneer
 
Description Partnership based business is the fundamental concept of doing commercial activity under Islamic rules and principles. To comply with Sharia’a principles within the boundaries of banking law in Pakistan, Financial Engineering provided the solution for all activities. One of the modes of financing in conventional banking system is Term Finance in which the client repays principle and profit at predefined time intervals. This need can be fulfilled by using Islamic Alternate i.e. “Diminishing Musharaka”. This paper investigates the viability of this financing mode as compare to conventional Term Finance which is being utilized by conventional banking system for the same purpose. The paper also highlights the growth of Diminishing Musharaka in quantitative terms as well as its acceptability by end users and Islamic Financial Institutions in the form of portfolio growth for this mode of financing. To quantify its growth, historical time series data with its quarterly trend is used from Islamic Banking Bulletin issued by State Bank of Pakistan. Some key advantages and disadvantages are also mentioned by analyzing them critically. Related Sharia’a rulings and their linkage to this mode of financing are discussed in this study to further support it in Islamic perspective. Benefits associated with this mode and practical applications are discussed with some recommendations. The study is beneficial for Islamic Financial sector, central banks and students of Islamic Banking & Finance. It also aimed to enhance the knowledge of students and users of this product.
 
Publisher Sheikh Zayed Islamic Centre, University of Karachi
 
Date 2020-12-31
 
Type info:eu-repo/semantics/article
info:eu-repo/semantics/publishedVersion
Peer-reviewed Article
 
Format application/pdf
 
Identifier http://theislamicculture.com/index.php/tis/article/view/727
 
Source The Islamic Culture "As-Saqafat-ul Islamia" الثقافة الإسلامية - Research Journal - Sheikh Zayed Islamic Centre, University of Karachi; Vol 44 (2020): The Islamic Culture
2663-1709
1813-775X
 
Language eng
 
Relation http://theislamicculture.com/index.php/tis/article/view/727/574
 
Rights Copyright (c) 2020 The Islamic Culture "As-Saqafat-ul Islamia" الثقافة الإسلامية - Research Journal - Sheikh Zayed Islamic Centre, University of Karachi
 

Contact Us

The PKP Index is an initiative of the Public Knowledge Project.

For PKP Publishing Services please use the PKP|PS contact form.

For support with PKP software we encourage users to consult our wiki for documentation and search our support forums.

For any other correspondence feel free to contact us using the PKP contact form.

Find Us

Twitter

Copyright © 2015-2018 Simon Fraser University Library