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Shari'ah-Based Financial Intermediation

Shari'ah-Based Financial Intermediation

Abdulazeem Abozaid
Copyright: © 2020 |Pages: 20
ISBN13: 9781799802181|ISBN10: 1799802183|ISBN13 Softcover: 9781799802198|EISBN13: 9781799802204
DOI: 10.4018/978-1-7998-0218-1.ch042
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MLA

Abozaid, Abdulazeem. "Shari'ah-Based Financial Intermediation." Handbook of Research on Theory and Practice of Global Islamic Finance, edited by Abdul Rafay, IGI Global, 2020, pp. 834-853. https://doi.org/10.4018/978-1-7998-0218-1.ch042

APA

Abozaid, A. (2020). Shari'ah-Based Financial Intermediation. In A. Rafay (Ed.), Handbook of Research on Theory and Practice of Global Islamic Finance (pp. 834-853). IGI Global. https://doi.org/10.4018/978-1-7998-0218-1.ch042

Chicago

Abozaid, Abdulazeem. "Shari'ah-Based Financial Intermediation." In Handbook of Research on Theory and Practice of Global Islamic Finance, edited by Abdul Rafay, 834-853. Hershey, PA: IGI Global, 2020. https://doi.org/10.4018/978-1-7998-0218-1.ch042

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Abstract

Financial intermediation is the core of the banking business, as its role is to mediate between the owners of surplus funds and those in need of finance, sharing the generated profit with the funds' owners. However, financial intermediation does involve some economic risks in terms of concentration of debt in financial institutions and the possibility of the inability of financed clients to repay their debts. When this happens, financial crises are inevitable, as it occurred in 2008. Islamic finance does not differ in this regard from its traditional counterparts, because the concentration of debts also holds on the concept of Islamic institutional finance, and the possibility of collective default is possible as well. The study treats the issue of financial intermediation and its risks from Maqasidi aspect using home finance as a point of comparison between conventional home finance with Islamic home finance in terms of their economic effects. The study eventually proposes a model for home financing that is free of these cautions.

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