Assigning capital in equity based financing ventures: the practice of interest free banks

Sadique, Muhammad Abdurrahman (2024) Assigning capital in equity based financing ventures: the practice of interest free banks. INTERNATIONAL JOURNAL OF RESEARCH AND INNOVATION IN SOCIAL SCIENCE (IJRISS), VIII (XI). pp. 3207-3213. ISSN 2454-6186

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Abstract

The interest-free mode of financing championed by Islamic banks in general worldwide favours investment on joint equity basis for generating profits, as against lending for earning interest income. In this process, the general requirement is that a stock of cash form the equity basis of the joint venture, as against debt forming such basis. However, some operational procedures adopted by current-day interest-free financial institutions in the course of financing undertaken on joint-equity basis generally appear to fall short in this respect. A major reason could be that while allocating a stock of cash towards an equity venture did not pose difficulties in the former times, today, the identity of money has undergone substantial change. Credit has come to supplement money, where credit creation by banks has played a major role. This research suggests that an Islamic law based assessment of the change in the essence and nature of money in the current context needs to be carried out, for verifying the legal implications of this phenomenon.

Item Type:	Article (Journal)
Uncontrolled Keywords:	Islamic law, capital, partnership, investment, joint venture, equity, interest-free
Subjects:	BPH Islamic Economics > BP322.3 Musharakah - Partnership BPH Islamic Economics > BPH754.3 Mudharabah - Trust Financing BPK Islamic law. Shari'ah. Fiqh H Social Sciences > HG Finance > HG1501 Banking
Kulliyyahs/Centres/Divisions/Institutes (Can select more than one option. Press CONTROL button):	Ahmad Ibrahim Kulliyyah of Laws Ahmad Ibrahim Kulliyyah of Laws > Department of Islamic Law
Depositing User:	Dr Muhammad Abdurrahman Sadique
Date Deposited:	02 Jan 2025 15:45
Last Modified:	02 Jan 2025 15:45
URI:	http://irep.iium.edu.my/id/eprint/117231

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