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DEVELOPMENT OF MUDARABAH INSTRUMENTS: UNDERSTANDING THEIR PROFITABILITY, SECURITIZATION AND NEGOTIABILITY ASPECTS

International Journal of Economics, Management and Accounting

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Title DEVELOPMENT OF MUDARABAH INSTRUMENTS: UNDERSTANDING THEIR PROFITABILITY, SECURITIZATION AND NEGOTIABILITY ASPECTS
 
Creator Anwar, Muhammad; Professor, Department of Economics, Kulliyyah of Economics and Management Sciences, International Islamic University Malaysia, Jalan Gombak, 53100 Kuala Lumpur, Malaysia. (e-mail: anwar@iiu.edu.my)
 
Description This paper attempts to examine the securitization, negotiability and profitability aspects of three types of mudarabah instruments; namely, asset-enfaced mudarabah instruments, currency-enfaced mudarabah instruments representing monetary contributions and currency-enfaced mudarabah instruments representing real assets. This paper begins with a distinction between riba (usury) and profit and concludes that an exchange of currency-enfaced mudarabah instruments in varying amounts entails riba while an exchange of asset-enfaced mudarabah instruments will generate legitimate profits. The current practice is to issue currency-enfaced mudarabah instruments but treat them as asset-enfaced mudarabah instruments. This position is analyzed and policy implications are drawn for future development of mudarabah instruments.JEL classification: G10, P43, Z12Key words: Mudarabah instruments, Islamic finance, Financial instrument
 
Publisher Kulliyyah of Economics and Management Sciences
 
Contributor —
 
Date 2013-02-27
 
Type info:eu-repo/semantics/article
info:eu-repo/semantics/publishedVersion
Peer-reviewed Article
 
Format application/pdf
 
Identifier http://journals.iium.edu.my/enmjournal/index.php/enmj/article/view/71
 
Source International Journal of Economics, Management and Accounting; Vol 9, No 2 (2001)
 
Language eng
 
Relation http://journals.iium.edu.my/enmjournal/index.php/enmj/article/view/71/54