Diminishing musyarakah investment model based on equity

Maheran Mohd Jaffar, Shaharir Mohamad Zain, Abdul Aziz Jemain

Research output: Chapter in Book/Report/Conference proceedingConference contribution

Abstract

Most of the mudharabah and musyarakah contract funds are involved in debt financing. This does not support the theory that profit sharing contract is better than that of debt financing due to the sharing of risks and ownership of equity. Indeed, it is believed that Islamic banking is a financial model based on equity or musyarakah which emphasis on the sharing of risks, profit and loss in the investment between the investor and entrepreneur. The focus of this paper is to introduce the mathematical model that internalizes diminishing musyarakah, the sharing of profit and equity between entrepreneur and investor. The entrepreneur pays monthly-differed payment to buy out the equity that belongs to the investor (bank) where at the end of the specified period, the entrepreneur owns the business and the investor (bank) exits the joint venture. The model is able to calculate the amount of equity at any time for both parties and hence would be a guide in helping to estimate the value of investment should the entrepreneur or investor exit before the end of the specified period. The model is closer to the Islamic principles for justice and fairness.

Original languageEnglish
Title of host publicationProceedings of the 13th IMT-GT International Conference on Mathematics, Statistics and their Applications, ICMSA 2017
PublisherAmerican Institute of Physics Inc.
Volume1905
ISBN (Electronic)9780735415959
DOIs
Publication statusPublished - 22 Nov 2017
Event13th IMT-GT International Conference on Mathematics, Statistics and their Applications, ICMSA 2017 - Kedah, Malaysia
Duration: 4 Dec 20177 Dec 2017

Other

Other13th IMT-GT International Conference on Mathematics, Statistics and their Applications, ICMSA 2017
CountryMalaysia
CityKedah
Period4/12/177/12/17

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mathematical models
estimates

ASJC Scopus subject areas

  • Physics and Astronomy(all)

Cite this

Jaffar, M. M., Zain, S. M., & Jemain, A. A. (2017). Diminishing musyarakah investment model based on equity. In Proceedings of the 13th IMT-GT International Conference on Mathematics, Statistics and their Applications, ICMSA 2017 (Vol. 1905). [020003] American Institute of Physics Inc.. https://doi.org/10.1063/1.5012143

Diminishing musyarakah investment model based on equity. / Jaffar, Maheran Mohd; Zain, Shaharir Mohamad; Jemain, Abdul Aziz.

Proceedings of the 13th IMT-GT International Conference on Mathematics, Statistics and their Applications, ICMSA 2017. Vol. 1905 American Institute of Physics Inc., 2017. 020003.

Research output: Chapter in Book/Report/Conference proceedingConference contribution

Jaffar, MM, Zain, SM & Jemain, AA 2017, Diminishing musyarakah investment model based on equity. in Proceedings of the 13th IMT-GT International Conference on Mathematics, Statistics and their Applications, ICMSA 2017. vol. 1905, 020003, American Institute of Physics Inc., 13th IMT-GT International Conference on Mathematics, Statistics and their Applications, ICMSA 2017, Kedah, Malaysia, 4/12/17. https://doi.org/10.1063/1.5012143
Jaffar MM, Zain SM, Jemain AA. Diminishing musyarakah investment model based on equity. In Proceedings of the 13th IMT-GT International Conference on Mathematics, Statistics and their Applications, ICMSA 2017. Vol. 1905. American Institute of Physics Inc. 2017. 020003 https://doi.org/10.1063/1.5012143
Jaffar, Maheran Mohd ; Zain, Shaharir Mohamad ; Jemain, Abdul Aziz. / Diminishing musyarakah investment model based on equity. Proceedings of the 13th IMT-GT International Conference on Mathematics, Statistics and their Applications, ICMSA 2017. Vol. 1905 American Institute of Physics Inc., 2017.
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