Detoxification of Forfeited Collaterals of Banks Using Murabaha Bonds for Liquidity with Options
Using a descriptive-analytical method, this study proposes a new method to make profit from forfeited properties that can be employed by the banking system to provide cheap financing. The main hypothesis of this study contends that Murabaha bonds for providing liquidity along with their derived inst...
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Iran Banking Institute
2018-06-01
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Series: | مطالعات مالی و بانکداری اسلامی |
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Online Access: | http://jifb.ibi.ac.ir/article_65128_162c1285ac2a6530e6667f279d3f97f5.pdf |
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doaj-90d6e5b84e794c41b70c383614509c732020-11-24T21:17:18ZfasIran Banking Instituteمطالعات مالی و بانکداری اسلامی2588-35692588-44332018-06-014بهار518065128Detoxification of Forfeited Collaterals of Banks Using Murabaha Bonds for Liquidity with OptionsMohammad Naghi Nazarpour0Abbas Dadjouye Tavakoli1Faculty Member, Mofid UniversityPhD Student in Economics, Mofid UniversityUsing a descriptive-analytical method, this study proposes a new method to make profit from forfeited properties that can be employed by the banking system to provide cheap financing. The main hypothesis of this study contends that Murabaha bonds for providing liquidity along with their derived instruments such as legitimate put and call options, with a controlled return risk, can help banks with the frozen profit of forfeited properties and provide cheap financial resources, compared to the current state of the money market. Banks can use this method to sell such assets based on the market rate (calculated through discovering the prices in commodities exchange) and using Murabaha bonds, while postponing the delivery of properties up to two years. This will provide them with the much needed liquidity while taking advantage of the rent until the deadline for delivery, before which, the banks will be entitled to rent out the property according to the contract. At the delivery time, the property will either be handed over to the intermediate company (SPV) to be sold in the market and the sums divided among bond holders; or the manner of final settlement will be determined by granting the rights for call option and put option respectively to the bank and the intermediate company on behalf of the bond holders. Considering that there is no obligation in call and put options as a second contract, Murabaha contract will not lead to Ba'i al-'Ayn (sales in cash of a property just bought on installment).http://jifb.ibi.ac.ir/article_65128_162c1285ac2a6530e6667f279d3f97f5.pdfBank FinancingMurabaha BondsForfeited Properties |
collection |
DOAJ |
language |
fas |
format |
Article |
sources |
DOAJ |
author |
Mohammad Naghi Nazarpour Abbas Dadjouye Tavakoli |
spellingShingle |
Mohammad Naghi Nazarpour Abbas Dadjouye Tavakoli Detoxification of Forfeited Collaterals of Banks Using Murabaha Bonds for Liquidity with Options مطالعات مالی و بانکداری اسلامی Bank Financing Murabaha Bonds Forfeited Properties |
author_facet |
Mohammad Naghi Nazarpour Abbas Dadjouye Tavakoli |
author_sort |
Mohammad Naghi Nazarpour |
title |
Detoxification of Forfeited Collaterals of Banks Using Murabaha Bonds for Liquidity with Options |
title_short |
Detoxification of Forfeited Collaterals of Banks Using Murabaha Bonds for Liquidity with Options |
title_full |
Detoxification of Forfeited Collaterals of Banks Using Murabaha Bonds for Liquidity with Options |
title_fullStr |
Detoxification of Forfeited Collaterals of Banks Using Murabaha Bonds for Liquidity with Options |
title_full_unstemmed |
Detoxification of Forfeited Collaterals of Banks Using Murabaha Bonds for Liquidity with Options |
title_sort |
detoxification of forfeited collaterals of banks using murabaha bonds for liquidity with options |
publisher |
Iran Banking Institute |
series |
مطالعات مالی و بانکداری اسلامی |
issn |
2588-3569 2588-4433 |
publishDate |
2018-06-01 |
description |
Using a descriptive-analytical method, this study proposes a new method to make profit from forfeited properties that can be employed by the banking system to provide cheap financing. The main hypothesis of this study contends that Murabaha bonds for providing liquidity along with their derived instruments such as legitimate put and call options, with a controlled return risk, can help banks with the frozen profit of forfeited properties and provide cheap financial resources, compared to the current state of the money market. Banks can use this method to sell such assets based on the market rate (calculated through discovering the prices in commodities exchange) and using Murabaha bonds, while postponing the delivery of properties up to two years. This will provide them with the much needed liquidity while taking advantage of the rent until the deadline for delivery, before which, the banks will be entitled to rent out the property according to the contract. At the delivery time, the property will either be handed over to the intermediate company (SPV) to be sold in the market and the sums divided among bond holders; or the manner of final settlement will be determined by granting the rights for call option and put option respectively to the bank and the intermediate company on behalf of the bond holders. Considering that there is no obligation in call and put options as a second contract, Murabaha contract will not lead to Ba'i al-'Ayn (sales in cash of a property just bought on installment). |
topic |
Bank Financing Murabaha Bonds Forfeited Properties |
url |
http://jifb.ibi.ac.ir/article_65128_162c1285ac2a6530e6667f279d3f97f5.pdf |
work_keys_str_mv |
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