On the Design of Interest-Free Instruments

10 Pages Posted: 24 Nov 2017

See all articles by Ali F. Darrat

Ali F. Darrat

Louisiana Tech University - College of Business

Shahid M. Ebrahim

Durham Business School

Date Written: 1996

Abstract

The main purpose of this paper is to present a theoretical model of an alternative fund-raising scheme for Muslim governments which are restricted by religious regulations against fixed-interest debt financing techniques. The proposed instrument is developed using the principles of a partial equilibrium theory for risk neutral as well as risk averse investors. The paper concludes with theoretical and empirical discussions on the efficiency of the financial instrument proposed.

Suggested Citation

Darrat, Ali F. and Ebrahim, Shahid M., On the Design of Interest-Free Instruments (1996). Journal of King Abdulaziz University: Islamic Economics, Vol. 8, No. 1, 1996, Available at SSRN: https://ssrn.com/abstract=3074508

Ali F. Darrat (Contact Author)

Louisiana Tech University - College of Business ( email )

Department of Economics & Finance
P.O. Box 10318
Ruston, LA 71272
United States
318-257-3874 (Phone)
318-257-4253 (Fax)

Shahid M. Ebrahim

Durham Business School

Mill Hill Lane
Durham, Durham DH1 3LB
United Kingdom

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