Risk Sharing in Corporate and Public Finance: The Contribution of Islamic Finance
Financial crises have become a recurring problem for modern economies with increasingly detrimental fallouts. Risk-sharing finance (RSF) contracts may be the best instrument for addressing the problem and its fallout, and in particular the risk-sharing principles of Islamic finance offer a potential...
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Associazione Economia civile
2015-09-01
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Online Access: | http://ojs.uniroma1.it/index.php/PSLQuarterlyReview/article/view/13168/12982 |
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doaj-18eeb69ae7294470b1479911e7ff1a562020-11-24T23:11:58ZengAssociazione Economia civilePSL Quarterly Review2037-36352037-36432015-09-0168274187213Risk Sharing in Corporate and Public Finance: The Contribution of Islamic FinanceObiyathulla Ismath BachaAbbas MirakhorHossein AskariFinancial crises have become a recurring problem for modern economies with increasingly detrimental fallouts. Risk-sharing finance (RSF) contracts may be the best instrument for addressing the problem and its fallout, and in particular the risk-sharing principles of Islamic finance offer a potential alternative. This paper offers some preliminary thoughts on the design and implementation of RSF for both private and public sector funding, for revenue and non-revenue generating projects. It is argued that such form of financing avoids the leverage of conventional debt, minimizes the costs of dilution, reduces macroeconomic vulnerability, and enhances financial inclusion. It also has the potential to be a less risky alternative for developing countries to finance public spending and economic growth. JEL Classifications: G32, P43, O16http://ojs.uniroma1.it/index.php/PSLQuarterlyReview/article/view/13168/12982Islamic financerisk sharingrisk shiftingfinancial inclusionequitydebtleverage |
collection |
DOAJ |
language |
English |
format |
Article |
sources |
DOAJ |
author |
Obiyathulla Ismath Bacha Abbas Mirakhor Hossein Askari |
spellingShingle |
Obiyathulla Ismath Bacha Abbas Mirakhor Hossein Askari Risk Sharing in Corporate and Public Finance: The Contribution of Islamic Finance PSL Quarterly Review Islamic finance risk sharing risk shifting financial inclusion equity debt leverage |
author_facet |
Obiyathulla Ismath Bacha Abbas Mirakhor Hossein Askari |
author_sort |
Obiyathulla Ismath Bacha |
title |
Risk Sharing in Corporate and Public Finance: The Contribution of Islamic Finance |
title_short |
Risk Sharing in Corporate and Public Finance: The Contribution of Islamic Finance |
title_full |
Risk Sharing in Corporate and Public Finance: The Contribution of Islamic Finance |
title_fullStr |
Risk Sharing in Corporate and Public Finance: The Contribution of Islamic Finance |
title_full_unstemmed |
Risk Sharing in Corporate and Public Finance: The Contribution of Islamic Finance |
title_sort |
risk sharing in corporate and public finance: the contribution of islamic finance |
publisher |
Associazione Economia civile |
series |
PSL Quarterly Review |
issn |
2037-3635 2037-3643 |
publishDate |
2015-09-01 |
description |
Financial crises have become a recurring problem for modern economies with increasingly detrimental fallouts. Risk-sharing finance (RSF) contracts may be the best instrument for addressing the problem and its fallout, and in particular the risk-sharing principles of Islamic finance offer a potential alternative. This paper offers some preliminary thoughts on the design and implementation of RSF for both private and public sector funding, for revenue and non-revenue generating projects. It is argued that such form of financing avoids the leverage of conventional debt, minimizes the costs of dilution, reduces macroeconomic vulnerability, and enhances financial inclusion. It also has the potential to be a less risky alternative for developing countries to finance public spending and economic growth.
JEL Classifications: G32, P43, O16 |
topic |
Islamic finance risk sharing risk shifting financial inclusion equity debt leverage |
url |
http://ojs.uniroma1.it/index.php/PSLQuarterlyReview/article/view/13168/12982 |
work_keys_str_mv |
AT obiyathullaismathbacha risksharingincorporateandpublicfinancethecontributionofislamicfinance AT abbasmirakhor risksharingincorporateandpublicfinancethecontributionofislamicfinance AT hosseinaskari risksharingincorporateandpublicfinancethecontributionofislamicfinance |
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