Instability of interest bearing debt finance and the Islamic finance alternative
Joint Authors
Shaukat, Mughis
al-Habashi, Datuk Uthman
Source
Issue
Vol. 23, Issue 2 (30 Nov. 2015), pp.29-84, 56 p.
Publisher
Islamic Development Bank (IDB) Islamic Research and Training Institute (IRTI)
Publication Date
2015-11-30
Country of Publication
Saudi Arabia
No. of Pages
56
Main Subjects
Economy and Commerce
Financial and Accounting Sciences
Religion
Islamic Studies
Topics
- Banks
- Financial crises
- International economics
- Islam
- Globalization
- Financing
- Debts
- Money
- Risk management
- Organization charts
- Interest
- Stocks
- Bank loans
- Fiscal stability
- Economic activities
Abstract EN
Evidence has been mounting that the interest-based debt financing regime is under increasing distress.
Evidence also suggests that the financial crises, whatever title they carried - exchange rate crisis or banking crisis – have been debt related crises in essence.
At present, data suggest that the debt-to- GDP ratio of the richest members of the G-20 is expected to reach 120% mark by 2014.
There is also evidence that out of securities worth US$ 200 trillion in the global economy, no less than three-fourth represent interestbased debt.
It is difficult to see how this massive debt volume can be validated by the underlying productive capacity of the global economy.
This picture becomes more alarming considering the anemic state of global economic growth.
There is great uncertainty with regard to interest rates.
Although policy-driven interest rates are near-zero level, there is no assurance that they will not rise as the risk and inflation premia become significant.
Hence, a more serious financial crisis may be in the offing and a general collapse of asset prices may occur.
This paper argues that the survival of the interest-based debt regime is becoming less tenable, as is the process of financialization that has accompanied the growth of global finance over the last four decades.
The above has resulted in an unprecedented increase in economic risks; generating (adverse) non
American Psychological Association (APA)
Shaukat, Mughis& al-Habashi, Datuk Uthman. 2015. Instability of interest bearing debt finance and the Islamic finance alternative. Islamic Economic Studies،Vol. 23, no. 2, pp.29-84.
https://search.emarefa.net/detail/BIM-657051
Modern Language Association (MLA)
Shaukat, Mughis& al-Habashi, Datuk Uthman. Instability of interest bearing debt finance and the Islamic finance alternative. Islamic Economic Studies Vol. 23, no. 2 (Nov. 2015), pp.29-84.
https://search.emarefa.net/detail/BIM-657051
American Medical Association (AMA)
Shaukat, Mughis& al-Habashi, Datuk Uthman. Instability of interest bearing debt finance and the Islamic finance alternative. Islamic Economic Studies. 2015. Vol. 23, no. 2, pp.29-84.
https://search.emarefa.net/detail/BIM-657051
Data Type
Journal Articles
Language
English
Notes
Includes bibliographical references : p. 57-84
Record ID
BIM-657051