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Islamic house financing:current models and a proposal from social perspective

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  • Hasan, Zubair

Abstract

Shelter is one of the basic needs for human beings. Its availability for the people is an Islamic imperative. In view of the appalling living conditions for a substantial proportion of population in most countries around the world, especially Muslim, Islamic banks have entered the field with varying schemes for house financing. In this infant industry, the effort is understandably guided by profit motive but a social dimension has to surface in course of time. Unfortunately, the models banks currently use for house financing remains under the juridical gaze, more so as the practice is not always found transparent. This paper looks at Islamic house financing models in a broader societal context. It evaluates the efficacy of the in practice financing structures and suggests a new approach. The proposed model is shown as superior to the existing ones. It meets the norms of equity, fair play and openness and does not presumably violate any other Islamic norm. Finally, the paper makes some policy suggestions to integrate Islamic house financing with broader social goals of an Islamic economy.

Suggested Citation

  • Hasan, Zubair, 2011. "Islamic house financing:current models and a proposal from social perspective," MPRA Paper 27919, University Library of Munich, Germany.
    • Handle: RePEc:pra:mprapa:27919
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    References listed on IDEAS

    as
    1. Zubair Hassan, 1997. "Fulfilment Of Basic Needs: Concept, Measurement, And Muslim Countries' Performance," IIUM Journal of Economics and Management, IIUM Journal of Economis and Management, vol. 5(2), pages 1-38, June.
    2. Richard Arnott, 2008. "Housing policy in developing countries. The importance of the informal economy," Working Papers 200801, University of California at Riverside, Department of Economics, revised Jan 2008.
    3. Malpezzi, Stephen & Mayo, Stephen K, 1987. "The Demand for Housing in Developing Countries: Empirical Estimates from Household Data," Economic Development and Cultural Change, University of Chicago Press, vol. 35(4), pages 687-721, July.
    4. Hasan, Zubair, 1988. "Distributional equity in Islam," MPRA Paper 2785, University Library of Munich, Germany.
    5. Richard Arnott, 2008. "Housing Policy in Developing Countries," World Bank Publications - Books, The World Bank Group, number 28043.
    Full references (including those not matched with items on IDEAS)

    Citations

    Blog mentions

    As found by EconAcademics.org, the blog aggregator for Economics research:
    1. How to finance housing in Islamic economies
      by Economic Logician in Economic Logic on 2011-02-18 21:30:00

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    Cited by:

    1. Hasan, Zubair, 2012. "Mortgage contracts in Islamic home finance: Musharakah Mutanaqisah program vs. Zubair diminishing balance model," MPRA Paper 39067, University Library of Munich, Germany.
    2. Hasan, Zubair, 2012. "Islamic norms, the excel formula and home financing models," MPRA Paper 47955, University Library of Munich, Germany, revised 2013.
    3. Hasan, Zubair, 2012. "Excel formula and Islamic norms for home financing," MPRA Paper 42835, University Library of Munich, Germany.

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    More about this item

    Keywords

    Key words: Housing problem; basic needs; Conventional model; BBA in housing; the MMP model; Diminishing balances model; Constructive ownership; National planning;
    All these keywords.

    JEL classification:

    • D60 - Microeconomics - - Welfare Economics - - - General
    • D14 - Microeconomics - - Household Behavior - - - Household Saving; Personal Finance
    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages

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