Haloui, Mouad El and Aboulaich, Rajae,(2019), Leveraged buyout booms and busts: can Islamic finance help prevent and mitigate such market distortions? , Investment Management and Financial Innovations, UNSPECIFIED
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Abstract
The industry of private equity and leveraged buyout has been, since its beginnings, subject
to several chapters of bubbles and busts, the majority of whom are initiated under
similar circumstances (excess of liquidity, junk debt and mimetic behavior).
The Islamic finance is a financial system that complies with the rules of the Sharia Law,
and which naturally allows the achievements of purposes of Sharia, such as protection
of property and capital, fair wealth distribution, reduction of uncertainty and speculation,
to name a few.
From this perspective, this paper discusses the capacity of Islamic finance to help prevent
some factors that trigger financial crises in the leveraged buyout market and to
accomplish the intended purposes through this asset class.
In the first part of this paper, the authors try to break down some of these common
factors that trigger or catalyze the economic booms of the leverage buyout industry,
and propose a framework to visualize their effects through an agent-based Simulation
program. The second part of the paper describes how Islamic economic principles
constitute brakes to some distortions and excesses in the market, in such a way that
the probability of occurrence of a boom decreases drastically. Finally, these Islamic
features are added up to the simulation to provide a comprehensive benchmark.
Keywords : | leveraged buyout, private equity, Islamic economics, complex systems, chaos, auction, debt, Sharia compliant, bubble, boom, UNSPECIFIED |
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Journal or Publication Title: | Investment Management and Financial Innovations |
Volume: | 16 |
Number: | 1 |
Item Type: | Article |
Subjects: | Ekonomi Islam |
Depositing User: | Users 15 not found. |
Date Deposited: | 23 Dec 2019 04:55 |
Last Modified: | 23 Dec 2019 04:55 |
URI: | https://repofeb.undip.ac.id/id/eprint/678 |