Debt-based financing: A case study of Malaysian Islamic banks
Document Type
Article
Publication Date
1-1-2024
Abstract
The present study aims to address the concept of debt-based financing from the Sharī‘ah perspective and to analyse the current practice of debt-based financing by the Islamic banks in Malaysia. A qualitative research approach is adopted using an in-depth study of the literature through classical and contemporary books to address the concept of debt-based financing. The practice of debt-based financing in Islamic banking is studied through the Islamic banks’ official websites. The present study reveals that the current Islamic banking system offers debt-based financing to the customers where the customers are liable to pay the debt through monthly instalments. However, the concept of dayn and the rights and responsibilities of a debtor is not clear to many customers, and the failure of fulfilling the obligation by the customers hinders the smooth operation of the Islamic banks. Moreover, debt-based financing is drawing more attention and interest among most Islamic banks as compared to equity-based financing which is creating more debt. Copyright © 2024 Inderscience Enterprises Ltd.
Keywords
Creditor, Dayn, Debt, Debt-based contract, Debtor, Islamic bank, Shariah
Divisions
DeptofFiqhUsul
Publication Title
Global Business and Economics Review
Volume
30
Issue
1
Publisher
Inderscience Publishers