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Article
Publication date: 1 March 2003

Felix Iblher and Dominik I. Lucius

Innovative financing instruments are well‐known in Anglo‐American real estate finance markets. This study is the first to analyse the use and structure of the innovative…

Abstract

Innovative financing instruments are well‐known in Anglo‐American real estate finance markets. This study is the first to analyse the use and structure of the innovative financing instruments in Germany. Based on a survey addressed to German banks offering real estate financing, instrument‐ and bank‐type specific patterns and reimbursement schemes are examined. While the research shows that innovative instruments are not yet widely used in Germany, banks possess experience in mezzanine capital, project and joint venture financing and are optimistic regarding the future development of demand for these instruments.

Details

Property Management, vol. 21 no. 1
Type: Research Article
ISSN: 0263-7472

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Article
Publication date: 4 April 2016

Permata Wulandari and Salina Kassim

The purpose of this paper is to highlight the issues and challenges in providing financing to the poor people based on the experience of Baitul Maal Wa Tamwil (BMT) in…

Abstract

Purpose

The purpose of this paper is to highlight the issues and challenges in providing financing to the poor people based on the experience of Baitul Maal Wa Tamwil (BMT) in Indonesia.

Design/methodology/approach

A series of structured interviews were conducted with the chairman and staff of the Central BMT (Induk Koperasi Syariah) in Jakarta which is the head-quarter of 382 BMTs throughout Indonesia, with additional chairman and shari’ah supervisory in Central BMT (Pusat Koperasi Syariah) in Makasar. Subsequently, the results from the structured interviews were analyzed using qualitative analysis to arrive at the model of the peculiarities of financing the poor in Indonesia.

Findings

The findings show that the Central BMT has built specific products and empowerment mechanisms for the poor and has an ideal product to be applied in 382 BMT in Indonesia. There are two schemes of financing source in BMT, namely, social ministry (Kelompok Usaha Bersama) and private financing (national and international donor). Specifically, the peculiarities of financing given in BMT are not only in the term of capital but also in the term of providing infrastructure and training for the poor. Moreover, collateral must be provided as a screening process for the poor people to secure any form of financing. If there is no collateral, potential borrowers must opt for joint-liability financing. Furthermore, if the poor could not repay the financing, endowment coming from charity and compulsory Islamic tax (zakat, infaq and sadaqah) would play a vital role to cover for the financing default. Lastly, religious capacity building is also provided as a part of risk management aspect.

Research limitations/implications

This study was only conducted in Indonesia which focussed on the peculiarities of financing for the poor people in Indonesia BMT. Despite this limitation, the findings of this study enable the construction of a model that highlights the issues and challenges that might arise in financing the poor in general.

Originality/value

The paper adds to the literature on Islamic microfinance by enabling researchers and practitioners to understand the model of Islamic microfinance in Indonesia. It also contributes toward enriching the knowledge in the Islamic microfinance area.

Details

International Journal of Bank Marketing, vol. 34 no. 2
Type: Research Article
ISSN: 0265-2323

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Article
Publication date: 1 October 2001

Masudul Alam Choudhury and Sulaiman A. Al‐Sakran

Explains how the adoption of Islamic law (Shariah) theoretically affects a political economy, why it requires the abolition of interest rates as a price for money and how…

Abstract

Explains how the adoption of Islamic law (Shariah) theoretically affects a political economy, why it requires the abolition of interest rates as a price for money and how this is achieved. Takes Saudi Arabia as an example of a Muslim country governed by Shariah and investigates how far it accords with theory. Argues that equity financing (including non‐interest bearing government bonds) has helped to finance growth and insulated the stock market from speculative financing. Looks at statistics on the financial structures, assets and loans of Saudi banks (including joing ventures with foreign banks) and concludes that they have “done well” in implementing Islamic principles; and that interest‐free financing is appropriate for this country.

Details

Managerial Finance, vol. 27 no. 10/11
Type: Research Article
ISSN: 0307-4358

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Article
Publication date: 8 August 2016

Permata Wulandari, Salina Kassim, Liyu Adhi Kasari Sulung and Niken Iwani Surya Putri

This paper aims to highlight on the unique aspects of Islamic microfinance based on the experience of Baitul Maal Wa Tamwil (BMT) in Indonesia.

Abstract

Purpose

This paper aims to highlight on the unique aspects of Islamic microfinance based on the experience of Baitul Maal Wa Tamwil (BMT) in Indonesia.

Design/methodology/approach

It adopts the content analysis approach and focuses on three phases of financing, namely, pre-financing, financing and post-financing using coding and model buildings. Data are collected through in-depth interview with a sample of representatives of BMTs that offer product based on Islamic principle for the poor located in Jakarta, Bogor, Depok, Tanggerang and Bekasi (JABODETABEK), Sulawesi Selatan, Yogyakarta and Nusa Tenggara Barat (sample chosen based on the most concentrated areas of Islamic microfinance that offered product based on Islamic principles). Ultimately, a model based on the unique features of Islamic microfinance will be developed based on the findings of the content analysis.

Findings

The proposed model incorporates the peculiarities of the poor people in pre-financing, financing and post-financing activities of micro-financing products to serve as a reference for policy makers. The paper also found that each region has unique product preferences depending on the poor’s characteristics.

Research limitations/implications

This study is only conducted in four areas with BMT representation, namely, Jakarta, Bogor, Depok, Tangerang, Bekasi (often abbreviated as JABODETABEK), Sulawesi Selatan, Yogyakarta and Nusa Tenggara Barat) in Indonesia. Despite the limited scope, the findings have wide applications to the Islamic microfinancing in general.

Originality/value

The paper adds value to the literature on Islamic microfinance by enabling researchers and practitioners to understand the model of three step financing (pre-financing, financing and post-financing) in Islamic microfinance in Indonesia. Although not a new issue, the paper provides the practice of pre-financing, financing and post-financing processes which may differ from the practices of Islamic microfinance in other settings because of different cultural influences unique to every region.

Details

Humanomics, vol. 32 no. 3
Type: Research Article
ISSN: 0828-8666

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Article
Publication date: 17 July 2019

Shaista Wasiuzzaman

This study aims to investigate the role of interfirm alliances in the form of resource sharing in influencing the access to finance of small- and medium-sized enterprises…

Abstract

Purpose

This study aims to investigate the role of interfirm alliances in the form of resource sharing in influencing the access to finance of small- and medium-sized enterprises (SMEs) in Malaysia. Further, the effect of different forms of resource sharing – tangible and intangible – is also studied.

Design/methodology/approach

Survey questionnaire was distributed to 456 SMEs in the manufacturing sector and a total of 146 responses were gathered. However, out of these, only 88 responses could be used as only these SMEs had alliances with large firms. Investigation into the relationship between interfirm alliances and SME access to finance was carried out using structural equation modeling – partial least squares.

Findings

It is found that interfirm alliances play a significant positive role in influencing SME access to finance. As interfirm alliances are measured as the extent of resource sharing, further analysis is carried out on the different forms of resource sharing, i.e. tangible and intangible. Tangible resource (asset and cost) sharing significantly influences SME access to finance but intangible resource (knowledge and information) sharing does not.

Originality/value

This study contributes to the understanding of the effects of interfirm alliances on the financing of SMEs. So far, most studies have only focused on the management and technological gains of interfirm alliances. Therefore, this study contributes significantly to literature on resource sharing among firms.

Details

Management Research Review, vol. 42 no. 12
Type: Research Article
ISSN: 2040-8269

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Article
Publication date: 3 August 2018

Clement Tisdell and Shabbir Ahmad

The aim of this study is to examine arguments about the economic and ethical worth of microfinance.

Abstract

Purpose

The aim of this study is to examine arguments about the economic and ethical worth of microfinance.

Design/methodology/approach

This study draws on the available literature to provide a balanced discussion of different views about the economic and ethical desirability of microfinancing. The discussion is reinforced by the use of secondary data (statistics) on the attributes of microfinancing and by reference to a case study in rural Pakistan.

Findings

Microfinancing is less virtuous than commonly portrayed. Its economic inefficiency consequences are identified, and it is found only likely to make a small contribution to economic growth. The economic efficiency criterion for moral worth (promoted by Becker and Posner) is found to be wanting. From an ethical point of view, microfinance needs to be supplemented by charity to assist the poor. The supply of Islamic microfinance has grown rapidly, but it remains absolutely quite small. It still has some way to go to overcome the ethical and economic shortcomings associated with the supply of microfinance. Supplying microfinance to vulnerable female borrowers can put them under considerable psychological stress. Possible beneficial effects of microfinance are also identified.

Originality/value

This study is unique because it systematically draws on recent literature and data to provide a novel and balanced review of the economic and ethical worth of microfinance.

Details

International Journal of Ethics and Systems, vol. 34 no. 3
Type: Research Article
ISSN: 0828-8666

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Article
Publication date: 10 May 2013

Rifki Ismal

This paper attempts to construct Islamic gracious monetary instruments namely Qardh hassan, Waqf and Gift central bank certificates. The certificates do not only function…

Abstract

Purpose

This paper attempts to construct Islamic gracious monetary instruments namely Qardh hassan, Waqf and Gift central bank certificates. The certificates do not only function as monetary instruments per se, but also give economic and social benefit for the public such as the needy. However, the central bank and its counterparts still need to manage the funds professionally to produce profit, maintain the values of the funds and prevent business losses. As such, this theoretical study aims to offer alternative Islamic monetary instruments for the central bank to manage liquidity and especially to improve the welfare of the people.

Design/methodology/approach

The paper exercises three Islamic gracious monetary instruments (Qardh hassan, Waqf and Gift central bank certificates) for both investment based (Mudarabah and Musharakah) financing and trading based (Ijarah and Murabahah) financing. Every instrument is elaborated mathematically to analyze its economic impact, treatment of profit and loss coming from the business and status of the funds. Finally, the paper compares every gracious certificate and explains the terms and conditions to use them optimally.

Findings

The exercises find unique characteristics, operations and contribution of every Islamic gracious monetary instrument to the economy. Based on economic impact, nature of the contracts and management of the funds, the central bank can now have alternative Islamic monetary instruments to be offered to the generous depositors to improve the welfare of the people particularly the needy.

Research limitations/implications

The paper only assesses the feasibility of three Islamic gracious monetary instruments. There might be more alternatives of Islamic gracious monetary instruments to be considered and elaborated.

Originality/value

To the best of author's knowledge, this is the first paper to try to exercise the alternative of the Islamic gracious monetary instruments.

Details

Journal of Economic and Administrative Sciences, vol. 29 no. 1
Type: Research Article
ISSN: 1026-4116

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Article
Publication date: 12 March 2018

Masudul Alam Choudhury

The purpose of this study/paper is the generalized ontological law of monotheism (unity of knowledge) and its functioning in the financial world system is summarized and…

Abstract

Purpose

The purpose of this study/paper is the generalized ontological law of monotheism (unity of knowledge) and its functioning in the financial world system is summarized and contrasted with the recent conception of “shari’ah-compliance”. Thereby, some specific rulings of shari’ah-compliance in Islamic finance are critically annulled. The principal problem of the inability of shari’ah-compliance in the formalism of rate-setting and debt cancellation is pointed out in analytical ways. The alternative valuation models in the light of the Tawhidi ontological law are formalized. Many important issues are examined in analytical and Tawhidi authentic ways of Islamic law contra to shari’ah-compliance.

Design/methodology/approach

The epistemological approach commencing from the Tawhidi ontological law is used as the premise of developing analytical formalism to counter the irrelevant rulings done by the field of shari’ah compliance. Thereby, endogenous moral and ethical foundations are studied in deriving analytical finance models of asset valuation, rate-determination and debt cancellation.

Findings

Substantive analytical results are derived for intellection in the area of the primal ontological law of Tawhid that negates many of the rulings framed up in shari’ah-compliance area of Islamic law. These results can guide financial academia, practitioners and policymakers.

Research limitations/implications

The paper can be expanded subsequently to the area of analytical Islamic finance in general by further investigating the Modigliani and Miller theorem on optimal debt-equity structure of corporate finance. An introduction to this study is provided in this paper as a starting point of dealing with the debt problem of shari’ah-compliance.

Practical implications

The paper presents important guidance as input for the rulings of shari’ah-compliance idea held by shari’ah advisory boards and similar institutions presently operating at the financial level.

Social implications

The paper presents a subtle transformation of the social and financial order in the light of the Tawhidi ontological law quite differently from the way that shari’ah-compliance envisions.

Originality/value

The theoretical and projected applied perspectives in analytical finance presented in this paper provide a methodological worldview for all areas of social finance with ethical consciousness. Such analytical approach is much needed today in the reconstruction of global finance in the scale of ethics and away from the sole focus on capital market efficiency.

Details

International Journal of Law and Management, vol. 60 no. 2
Type: Research Article
ISSN: 1754-243X

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Article
Publication date: 1 March 2005

Masudul Alam Choudhury and Mostaque Hussain

Theological perspectives in ethics, values and their functional application in the real world are vividly covered by the theory and practice of Islamic banking in recent…

Abstract

Purpose

Theological perspectives in ethics, values and their functional application in the real world are vividly covered by the theory and practice of Islamic banking in recent times. This paper seeks to formalize the theological paradigm of the unity of God (Tawhid) and to make the groundwork of unity of knowledge in the context of the money, finance and real economy linkages.Design/methodology/approach – The paper combines narrative with argument and analysis.Findings – On the basis of this the structure of the balance sheet of Islamic banks with no interest rate as an ethical condition of Islamic financing is delineated. This topic is followed by a discussion on the experience of Islamic banks in recent times in the area of mobilizing resources and gaining profitability, popularity and stability by the Islamic financing methods and the direct mobilizing of financial resources into the real economy. In this way, the Islamic banks are shown to attain the much‐needed complementary relations between social well‐being for clients and financial efficiency for the banks.Originality/value – Adds insights to the theory and practice of Islamic banking.

Details

International Journal of Social Economics, vol. 32 no. 3
Type: Research Article
ISSN: 0306-8293

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Article
Publication date: 1 March 2002

Masudul Alam Choudhury and Mohammad Al‐Hasan Biraima

Reliance on statistical data on trade and development for Islamic countries cannot forecast the state of the future state of reconstruction of the Muslim World in this…

Abstract

Reliance on statistical data on trade and development for Islamic countries cannot forecast the state of the future state of reconstruction of the Muslim World in this field. The limitation here is due to the age‐old debility of the Muslim World to project any significant economic, social and institutional transformation in the light of her own communal interest and self‐reliance. Thus the past economic data on trade and development variables show no pattern of future change. Forecasting with these data simply projects the past state of the Muslim World into the future. For these reasons, a model of reconstruction and transformation of the Muslim World on Islamic grounds necessitates reliance on normative issues. Yet these are issues that are First theoretically modelled and then empirically investigated for viability according to survey data.

Details

Humanomics, vol. 18 no. 3
Type: Research Article
ISSN: 0828-8666

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