A Model of Demand for Islamic Banks’ Debt-based Financing Instruments
Model Permintaan untuk Instrumen Pembiayaan Berasas Hutang Perbankan Islam

Faculty of Economics and Management
Universiti Kebangsaan Malaysia
43600 UKM Bangi, Selangor, MALAYSIA

mansorj@ukm.my

Faculty of Economics and Management
Universiti Kebangsaan Malaysia
43600 UKM Bangi, Selangor, MALAYSIA

nrlin@ukm.my

Abstract

This paper presents a theoretical analysis of the demand for debt-based financing instruments of the Islamic banks. Debt-based financing, such as through bai bithaman ajil and al-murabahah, is by far the most prominent of the Islamic bank financing system and yet it has been largely ignored in Islamic economics literature. Most studies instead have been focusing on equity-based financing of al-mudarabah and al-musyarakah. Islamic banks offer debt-based financing through various instruments derived under the principle of exchange or more specifically, the deferred contract of exchange. In this paper we set an analytical framework that is based on an infinitely lived representative agent model to analyze the demand for goods to be purchased by deferred payments. The resulting demand will then be used to derive the demand for Islamic debt. We also investigate theoretically, factors that may have an impact on the demand for Islamic debt.

Keywords

Debt-based financing; deferred contract of exchange; inter-temporal utility maximizing model; Islamic banking; Islamic debt

Citation

Jusoh, M., & Khalid, N. K. (2013). A Model of Demand for Islamic Banks’ Debt-based Financing Instruments. Jurnal Pengurusan, 39, 31–36.

@article{jusoh2013model,
  title={A Model of Demand for Islamic Banks’ Debt-based Financing Instruments},
  author={Jusoh, Mansor and Khalid, Norlin},
  journal={Jurnal Pengurusan},
 

volume={39},
  number={},
  pages={31—36},
  year={2013},
  doi={},
  publisher={Penerbit UKM},
}

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39 (2013) 31 – 36

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