Speaker: Professor Muhammed-Shahid Ebrahim, Durham University
Chair: Professor Victor Murinde, SOAS University of London
Time: Wednesday, 15 January 2020, 13:00-15:00
Venue: S314 (Paul Webley Wing, Senate House), SOAS University of London
Abstract
This paper contends that the contemporary Islamic banking facility of murabaha is not efficient as it is employed in the financial sector of the economy. To move forward, we adapt a working capital setting in the real sector of the economy. We identify the ‘classic’ murabaha (as opposed to the contemporary ‘banking’ murabaha) facility as a forward sale and link it to trade credit. Using a partial-equilibrium framework, we then conceptualize the classic murabaha within a Universal Banking architecture that not only severs the facility from an interest-based index but also offers more competitive financing rates. We argue that our approach has the potential to improve the efficiency of financial contracting.
JEL classification: G21; G32; Z12
Keywords: Islamic banking; Mark-up (murabaha) financing; Trade credit; Universal banking; Working capital financing
Seminar presenter
Professor Muhammed-Shahid Ebrahim holds a Doctorate in Business Administration from Southern Illinois University, an MBA from the University of Wisconsin and an MSE from the University of Pennsylvania. His research is focused on financial development. This involves studying asset pricing and financial contracting, as applied to Islamic banking and finance, corporate finance and real estate finance. Prior to joining Durham he held the position as a Professor of Islamic banking and finance at the Bangor Business School and has previously held roles as a financial analyst/planner with the United Bank of Kuwait and IDS-American Express. Professor Ebrahim was a Research Fellow at the Oxford Centre for Islamic Studies and Harvard University Islamic Finance Program. He has been the recipient of the Harwood Memorial Real Estate scholarship and Outstanding Faculty of Management Lecturer Award by the University of Brunei Darussalam. He co-authors with the well-known Nobel Prize winner Robert Shiller and has published numerous journal articles included in international prestigious publications such as the Journal of Banking and Finance, Journal of Corporate Finance and Journal of Economic Dynamics and Control.