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Development Of Mudarabah Instruments: Understanding Their Profitability, Securitization And Negotiability Aspects

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  • Muhammad Anwar

Abstract

This paper attempts to examine the securitization, negotiability and profitability aspects of three types of muèOErabah instruments; namely, asset-enfaced muèOErabah instruments, currency-enfaced muèOErabah instruments representing monetary contributions and currency-enfaced muèOErabah instruments representing real assets. This paper begins with a distinction between ribOE (usury) and profit and concludes that an exchange of currencyenfaced muèOErabah instruments in varying amounts entails ribOE while an exchange of asset-enfaced muèOErabah instruments will generate legitimate profits. The current practice is to issue currency-enfaced muèOErabah instruments but treat them as asset-enfaced muèOErabah instruments. This position is analyzed and policy implications are drawn for future development of muèOErabah instruments.

Suggested Citation

  • Muhammad Anwar, 2001. "Development Of Mudarabah Instruments: Understanding Their Profitability, Securitization And Negotiability Aspects," IIUM Journal of Economics and Management, IIUM Journal of Economis and Management, vol. 9(2), pages 165-186, December.
    • Handle: RePEc:ije:journl:v:9:y:2001:i:2:p:165-186
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    References listed on IDEAS

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    1. Muhammad Anwar, 1995. "An Islamic Perspective on Capital Markets and "Islamic" Securities in Malaysia," The Pakistan Development Review, Pakistan Institute of Development Economics, vol. 34(4), pages 865-878.
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    More about this item

    Keywords

    MuèOErabah instruments; Islamic finance; Financial instruments;
    All these keywords.

    JEL classification:

    • G10 - Financial Economics - - General Financial Markets - - - General (includes Measurement and Data)
    • P43 - Political Economy and Comparative Economic Systems - - Other Economic Systems - - - Finance; Public Finance
    • Z12 - Other Special Topics - - Cultural Economics - - - Religion

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