Ariffina, Noraini Mohd. and Hj. Kassim, Salina and Abdul Razak, Dzuljastri,(2015), EXPLORING APPLICATION OF EQUITY-BASED FINANCING THROUGH MUSHĀRAKAH MUTANĀQIṢAH IN ISLAMIC BANKS IN MALAYSIA: PERSPECTIVE FROM THE INDUSTRY PLAYERS. , International Journal of Economics, Management and Accounting, UNSPECIFIED
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Abstract
Due to the prohibition of interest in Islamic financial transactions as well as
the nature of the Islamic banks which is based on the profit and loss sharing
concept, the equity-based financing should be widely adopted rather than
debt-based financing which is similar to that of the conventional banks. As
such, financing instruments such as Muḍārabah and Mushārakah are
supposedly the major financing instruments offered by the Islamic banks.
However, as argued in previous studies, the Islamic banks today are
concentrating more on debt-based financing, particularly Murābaḥah and
Ijārah contracts. Based on survey questionnaires on sixteen Islamic banks
in Malaysia, this study examines the perceptions of the Islamic bankers with
regard to issues on concept, pricing and compliance to Sharīʿah of equitybased
financing in Islamic banks in Malaysia. It also investigates the
challenges faced by Islamic banks in adopting equity-based financing, and
examines the current practice of Mushārakah Mutanāqiṣah principle that
has been applied by a few Islamic banks in Malaysia. Based on the findings
of this study, the respondents generally agree that the principle of profit and
loss sharing element under equity-based financing represents the true spirit
of Islamic banking practices. However, due to constraints arising from the
complex nature of equity financing products compared to conventional
debt-based products, the Islamic banks are hesitant in applying the true
concept of equity financing. Several recommendations on the possible ways
to gradually shift from debt-based financing to equity-based financing are
suggested, particularly on the needed financial infrastructure to support adoption of the equity-based financing by the Islamic banks.
Keywords : | Debt-based financing, Equity-based financing, Islamic banks, Malaysia, UNSPECIFIED |
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Journal or Publication Title: | International Journal of Economics, Management and Accounting |
Volume: | 23 |
Number: | 2 |
Item Type: | Article |
Subjects: | Ekonomi Islam |
Depositing User: | Users 15 not found. |
Date Deposited: | 27 Dec 2019 06:48 |
Last Modified: | 27 Dec 2019 06:48 |
URI: | https://repofeb.undip.ac.id/id/eprint/1057 |