THEORETICAL IMPACT OF ENHANCED MUSHARAKAH MUTANAQISAH HOME FINANCING ON REAL ESTATE PRICES

Keywords: Musharakah Mutanaqisah, Islamic home financing, RE cycles, RE bubble

Abstract

This paper theoretically analyzes two alternative modes of home financing. The first mode is the conventional housing loan and the other is Enhanced Musharakah Mutanaqisah (EMM) home financing. Our results reveal the EMM based setting is superior to the conventional housing loans in at least two aspects. These are the prevention of house price inflation in all phases of economic business cycle and the smoothening of real estate cycles. This means that, under the EMM, the risk of real estate bubble formation is subdued, which should prove to be welfare improving.

Author Biographies

Alam I. Asadov, Prince Sultan University, Riyadh, Saudi Arabia

Assistant Professor, Prince Sultan University, Prince Nasser Bin Farhan Street, Salah Ad Din, Riyadh

Mansor H. Ibrahim, International Centre for Education in Islamic Finance (INCEIF), Kuala Lumpur, Malaysia

The Deputy President Academic and Dean, International Centre for Education in Islamic Finance (INCEIF)

Scopus ID: 7402468619    

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Published
2018-08-28
How to Cite
Asadov, A., & Ibrahim, M. (2018). THEORETICAL IMPACT OF ENHANCED MUSHARAKAH MUTANAQISAH HOME FINANCING ON REAL ESTATE PRICES. Journal of Islamic Monetary Economics and Finance, 4(1), 133 - 160. https://doi.org/10.21098/jimf.v4i1.747
Section
Articles