Alternative strategies of international financing

Joint Authors

Qahf, Mundhir
Khan, Tariq Allah

Source

International Economic Relations from Islamic Perspectives

Publisher

Islamic Development Bank (IDB) Islamic Research and Training Institute (IRTI)

Publication Date

1992-12-31

Country of Publication

Saudi Arabia

No. of Pages

22

Main Subjects

Financial and Accounting Sciences

English Abstract

The paper reviews current forms of external finance classifying them into Debt Creating (DC) and Non-Debt Creating (NDC) flows.

While borrowing is considered to be a major source of DC flows, major components of NDC flows are identified as foreign direct investment and official transfers.

It is argued that new forms of international investments such as production sharing, turkey projects, build operate and transfer, offsets, subcontracting, franchising, revenue sharing etc.

may be of move interest to developing Islamic countries due to their risk and profit sharing nature and non-interest character.

A review of Islamic financing technique shows that financing techniques based on profit / risk sharing will develop better linkges between servicing external finance and forign exchange earning, would be more efficient in comparison to interest-based financing techniques in terms of their effects on domestic production capacity, equitable distribution of risk and reward, and promotion of investment incentives.

The paper also reviews some recent experiences in Islamic financing and conclude that Islamic financing techniques could easily and usefully be applied in international finance.

Language

English

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Data Type

Book chapters

Notes

Includes bibliographical references : p. 227-228

Record ID

BIM-778248