Equity-Based, Asset-Based and Asset-Backed Transactional Structures in Shari’a-Compliant Financing: Reflections on the Current Financial Crisis*

Authors


  • *

    The views expressed in this paper are solely those of the two authors and do not necessarily reflect the views of Amanie Business Solutions, its shareholders or its affiliates.

Razi Pahlavi Abdul Aziz, Consultant, Shari’a Compliant Finance, Amanie Business Solutions, Suite 35.01, Level 35, Menara AmBank, 8 Jalan Yap Kwan Seng, 50450, Kuala Lumpur, Malaysia. Email: razi@amanie.com.my Anne-Sophie Gintzburger, MPhil candidate, Center for Arab and Islamic Studies, Australian National University, Canberra, Australia. Email: as.gintzburger@anu.edu.au

Abstract

This paper presents interest-free equity-based, asset-based and asset-backed transactional structures endorsed by Shari’a-compliant finance. These structures could explain the potential and relative insulation, yet not immunity, of Islamic financial institutions from the financial crisis. Although Shari’a-compliant financing cannot solve the current financial crisis, the recovering market could consider incorporating some of the insulating principles underlying Shari’a-compliant financing and securitization products, as exemplified in the sample of Shari’a-compliant products in this paper, so as to offer better consumer protection.

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