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Can an Islamic model of housing finance cooperative elevate the economic status of the underprivileged?


Ebrahim, M. Shahid


Bitte beziehen Sie sich beim Zitieren dieses Dokumentes immer auf folgenden Persistent Identifier (PID):http://nbn-resolving.de/urn:nbn:de:0168-ssoar-314407

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Abstract A formal home loan is onerous to subprime borrowers in efficient markets. This can deter homeownership for financially strapped individuals, leading to a market failure. This paper proposes a special form of cooperative mortgage financing (practiced in Oman) to overcome this market failure. We integrate the literature of Mortgage Design with that of informal savings schemes (i.e., ROSCAs/ ASCRAs) to illustrate that this mode of financing dissipates credit risk better than the formal mode of financing. It is also resilient to volatility of interest rates and allows prepayments without any additional charges. Finally, we verify the assertions of Besley et al. (1994), and Hart and Moore (1998) that cooperative mortgages are pareto-superior to formal mortgages in special cases.
Thesaurusschlagwörter inflation
Klassifikation Volkswirtschaftslehre
Freie Schlagwörter C63 (Computational Techniques); G21 (Banks – Mortgages); G32 (Financing Policy – Capital and Ownership Structures); I31 (Welfare and Poverty); O17 (Formal and Informal Sectors; Institutional Arrangements); P13 (Cooperative Enterprises); ASCRA; Asset Bubble; Mutual Bank; Mortgage Design; ROSCA
Sprache Dokument Englisch
Publikationsjahr 2009
Seitenangabe 864–883 S.
Zeitschriftentitel Journal of Economic Behavior & Organization, 72 (2009) 3
DOI http://dx.doi.org/10.1016/j.jebo.2009.08.002
Status Postprint; begutachtet (peer reviewed)
Lizenz PEER Licence Agreement (applicable only to documents from PEER project)