Title: EVALUATION OF ISLAMIC FINANCING PRODUCTS FOR HOUSING AND INFRASTRUCTURE DEVELOPMENT
Abstract:Housing delivery and infrastructure development are fundamental necessities for economic growth of any nation. However, the provision of these essential services on the required scale to meet demand r...Housing delivery and infrastructure development are fundamental necessities for economic growth of any nation. However, the provision of these essential services on the required scale to meet demand remains problematic for most countries and governments worldwide. Lack of adequate supply of housing and infrastructure project finance has been identified as a major obstacle to such development. Previous studies and available literature have also highlighted that existing conventional finance and banking structures are unlikely to provide adequate funding streams necessary to address the acute shortage of housing and infrastructure particularly in developing countries. This paper evaluates the potential of Islamic financing products and services to contribute to housing and infrastructure finance. Firstly, a review of the principle features of Islamic financing products is provided. Secondly, the interest based conventional banking is compared with the Non-interest based Islamic finance which is currently gaining ground in many countries including the United States and the United Kingdom. Case studies of some Islamic banking products that have shaped the infrastructure landscape are provided. This study further evaluates and analyses the concept of cost of capital for Islamic finance models and products, and compares and contrasts it with conventional bank lending systems. The study finds that considerable potential exists for the construction industry worldwide to benefit from Islamic Finance which possesses business partnership characteristics that entail risks and reward sharing as opposed to the interest based conventional finance and banking systems. Furthermore, Islamic finance products are found suitable for housing and the construction industry. As a consequence, it is recommended, that individuals, clients, contractors, and business leaders should take a serious look at these products for their project and corporate finance needs for housing and infrastructure development.Read More
Publication Year: 2013
Publication Date: 2013-01-01
Language: en
Type: article
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Cited By Count: 2
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