An alternative method of house financing calculation in an islamic bank

Nur Amalina Binti Shafie, Zaidi Isa

Research output: Contribution to journalArticle

Abstract

Home financing in Islamic banking is an alternative for Muslims who intend to buy a house without the element of interest. However, the method of financing calculation still must purify because the current calculation method still refers to the conventional calculation method. Besides that, a portion of interest payment is higher than the capital return in the early period of payment. Therefore, the diminishing balance will decrease slightly in the early period of payment. The common method for loan housing, which are conventional method, Bai’ Bithaman Ajil (BBA), Musharakah Mutanaqisah Partnership (MMP) and Zubair Diminishing Balance Method (ZDBM) are analyzed. After the comparison made between the four methods, a new method is proposed. Results reveal that all the four methods have their own issue. Despite that, they are better than the conventional contract. The new suggested method will concern about a benefit between customer and bank.

Original languageEnglish
Pages (from-to)3677-3686
Number of pages10
JournalGlobal Journal of Pure and Applied Mathematics
Volume11
Issue number5
Publication statusPublished - 2015

Fingerprint

Alternatives
Diminishing
Banks
Banking
Customers
Decrease

ASJC Scopus subject areas

  • Mathematics(all)
  • Applied Mathematics

Cite this

An alternative method of house financing calculation in an islamic bank. / Shafie, Nur Amalina Binti; Isa, Zaidi.

In: Global Journal of Pure and Applied Mathematics, Vol. 11, No. 5, 2015, p. 3677-3686.

Research output: Contribution to journalArticle

@article{4ca8057752344f2c88fe9a61c941c550,
title = "An alternative method of house financing calculation in an islamic bank",
abstract = "Home financing in Islamic banking is an alternative for Muslims who intend to buy a house without the element of interest. However, the method of financing calculation still must purify because the current calculation method still refers to the conventional calculation method. Besides that, a portion of interest payment is higher than the capital return in the early period of payment. Therefore, the diminishing balance will decrease slightly in the early period of payment. The common method for loan housing, which are conventional method, Bai’ Bithaman Ajil (BBA), Musharakah Mutanaqisah Partnership (MMP) and Zubair Diminishing Balance Method (ZDBM) are analyzed. After the comparison made between the four methods, a new method is proposed. Results reveal that all the four methods have their own issue. Despite that, they are better than the conventional contract. The new suggested method will concern about a benefit between customer and bank.",
author = "Shafie, {Nur Amalina Binti} and Zaidi Isa",
year = "2015",
language = "English",
volume = "11",
pages = "3677--3686",
journal = "Global Journal of Pure and Applied Mathematics",
issn = "0973-1768",
publisher = "Research India Publications",
number = "5",

}

TY - JOUR

T1 - An alternative method of house financing calculation in an islamic bank

AU - Shafie, Nur Amalina Binti

AU - Isa, Zaidi

PY - 2015

Y1 - 2015

N2 - Home financing in Islamic banking is an alternative for Muslims who intend to buy a house without the element of interest. However, the method of financing calculation still must purify because the current calculation method still refers to the conventional calculation method. Besides that, a portion of interest payment is higher than the capital return in the early period of payment. Therefore, the diminishing balance will decrease slightly in the early period of payment. The common method for loan housing, which are conventional method, Bai’ Bithaman Ajil (BBA), Musharakah Mutanaqisah Partnership (MMP) and Zubair Diminishing Balance Method (ZDBM) are analyzed. After the comparison made between the four methods, a new method is proposed. Results reveal that all the four methods have their own issue. Despite that, they are better than the conventional contract. The new suggested method will concern about a benefit between customer and bank.

AB - Home financing in Islamic banking is an alternative for Muslims who intend to buy a house without the element of interest. However, the method of financing calculation still must purify because the current calculation method still refers to the conventional calculation method. Besides that, a portion of interest payment is higher than the capital return in the early period of payment. Therefore, the diminishing balance will decrease slightly in the early period of payment. The common method for loan housing, which are conventional method, Bai’ Bithaman Ajil (BBA), Musharakah Mutanaqisah Partnership (MMP) and Zubair Diminishing Balance Method (ZDBM) are analyzed. After the comparison made between the four methods, a new method is proposed. Results reveal that all the four methods have their own issue. Despite that, they are better than the conventional contract. The new suggested method will concern about a benefit between customer and bank.

UR - http://www.scopus.com/inward/record.url?scp=84946029047&partnerID=8YFLogxK

UR - http://www.scopus.com/inward/citedby.url?scp=84946029047&partnerID=8YFLogxK

M3 - Article

AN - SCOPUS:84946029047

VL - 11

SP - 3677

EP - 3686

JO - Global Journal of Pure and Applied Mathematics

JF - Global Journal of Pure and Applied Mathematics

SN - 0973-1768

IS - 5

ER -