1994/05/01 by John R. Presley, John G. Sessions · 1 citation
Business, Management and Accounting · Decision Sciences · Economics, Econometrics and Finance · #Auction Theory and Applications #Business #Classical economics #Doctrine #Economics #Finance #Investment (military) #Islam #Islamic Finance and Banking Studies #Islamic economics #Law #Law and economics #Microeconomics #Neoclassical economics #Political science #Profit sharing #Remuneration #Revelation #Syndicate #Taxation and Compliance Studies
paper · doi:10.2307/2234633
openalex publication_date 1994/05/01 · openalex created_date 2025/10/10 · openalex updated_date 2026/07/28
We illustrate the potential impact of the Islamic doctrine on western economic relationships by focusing on the prohibition of interest (riba) in Islamic economics. We show that the alternative method of financier remuneration (i.e. mudarabah profit-and-loss sharing) will, under certain conditions, enhance capital investment on account of its ability to act as an efficient revelation device. By applying ideas developed in the western contract literature, we show that a mudarabah contract between the manager of a project and a syndicate of investors may permit a more efficient revelation of any informational asymmetries between the two.