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Partnership-based equity instruments

In: Religion and Finance

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Abstract

Partnerships are non-interest financial arrangements employed extensively in Judaism, Christianity and Islam. The concept of partnership is different from pure lending, where the lender gets a guaranteed return regardless of the economic outcome of the venture financed. A partnership allows the transferring of funds from financier to an entrepreneur while ensuring participation of both the parties, if not necessarily in the management, then in the process of the sharing of risks and profits and losses. In addition, it develops a spirit of cooperation, group decision-making and the idea of brotherhood. Religious teaching contributes by providing guidance and rules based on equal opportunity, justice and societal development, governing equity participation and profit and loss sharing proportions. Jewish rabbis developed laws for iska and hetter iska. Under Christianity commenda evolved via societas and carati into the modern corporate form. Islamic jurists fashioned conditions and rules for mudaraba and musharaka. However, in the Muslim world partnerships did not evolve into corporations, as in the West.

Suggested Citation

  • ., 2019. "Partnership-based equity instruments," Chapters, in: Religion and Finance, chapter 7, pages 143-166, Edward Elgar Publishing.
  • Handle: RePEc:elg:eechap:14654_7
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    Cited by:

    1. Ruhrort, Lisa & Zehl, Franziska & Knie, Andreas, 2021. "Untersuchung von Einstellungen gegenüber einer Neuaufteilung öffentlicher Räume zulasten des Autoverkehrs: Ergebnisse einer repräsentativen Befragung im Berliner Bezirk Friedrichshain-Kreuzberg sowie ," Discussion Papers, Research Group Digital Mobility and Social Differentiation SP III 2021-602, WZB Berlin Social Science Center.

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