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Shariah: An efficiency analysis
The oil shock of 1973 brought newfound wealth to a group of ultraconservative Muslims. This wealth coincided with the growing demand for shariah compliant products. The prohibition against interest is not new but has been around for millennia. This dissertation attempted to ascertain if Shariah comp...
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| Format: | Thesis |
| Language: | English |
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School of Economics
2022
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| _version_ | 1867613200837509120 |
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| access_status_str | Open Access |
| author | Modack, Raeez Ahmed |
| author2 | Leiman, Anthony |
| author_browse | Leiman, Anthony Modack, Raeez Ahmed |
| author_facet | Leiman, Anthony Modack, Raeez Ahmed |
| author_sort | Modack, Raeez Ahmed |
| collection | Thesis |
| description | The oil shock of 1973 brought newfound wealth to a group of ultraconservative Muslims. This wealth coincided with the growing demand for shariah compliant products. The prohibition against interest is not new but has been around for millennia. This dissertation attempted to ascertain if Shariah compliance came at a cost to investors and if it was possible to be both just and efficient. We illustrate using Stiglitz and Cheung's sharecropping models that a profit and loss sharing contract can be as efficient as its alternatives (or more so), so there is no implicit tax on lenders who prefer a share of profit rather than a fixed return on a loan. The growth in Islamic finance has improved consumer awareness not only amongst Islamic investors, but also among ethical investors. Investors are now offered a chance to gain returns, without having to sacrifice their beliefs. Islamic finance may suffer from learning effects, portfolio managers certainly ‘learn by doing'. But once they have learned it seems that their portfolios need not underperform the market. However, it must be recognized that a lack of standardization and diverse scholar opinions can adversely affect the growth of the industry. |
| format | Thesis |
| id | oai:open.uct.ac.za:11427/35965 |
| institution | University of Cape Town (South Africa) |
| language | eng |
| last_indexed | 2026-06-10T12:32:21.936Z |
| license_str | Not specified — see source repository |
| provenance_str_mv | Harvested via OAI-PMH from UCTD — University of Cape Town Open Access Repository |
| publishDate | 2022 |
| publishDateRange | 2022 |
| publishDateSort | 2022 |
| publisher | School of Economics |
| publisherStr | School of Economics |
| record_format | dspace |
| source_str | UCTD — University of Cape Town Open Access Repository |
| spelling | oai:open.uct.ac.za:11427/35965 Shariah: An efficiency analysis Modack, Raeez Ahmed Leiman, Anthony Economics The oil shock of 1973 brought newfound wealth to a group of ultraconservative Muslims. This wealth coincided with the growing demand for shariah compliant products. The prohibition against interest is not new but has been around for millennia. This dissertation attempted to ascertain if Shariah compliance came at a cost to investors and if it was possible to be both just and efficient. We illustrate using Stiglitz and Cheung's sharecropping models that a profit and loss sharing contract can be as efficient as its alternatives (or more so), so there is no implicit tax on lenders who prefer a share of profit rather than a fixed return on a loan. The growth in Islamic finance has improved consumer awareness not only amongst Islamic investors, but also among ethical investors. Investors are now offered a chance to gain returns, without having to sacrifice their beliefs. Islamic finance may suffer from learning effects, portfolio managers certainly ‘learn by doing'. But once they have learned it seems that their portfolios need not underperform the market. However, it must be recognized that a lack of standardization and diverse scholar opinions can adversely affect the growth of the industry. 2022-03-07T12:35:06Z 2022-03-07T12:35:06Z 2021 2022-03-07T08:04:06Z Master Thesis Masters MCom http://hdl.handle.net/11427/35965 eng application/pdf School of Economics Faculty of Commerce |
| spellingShingle | Economics Modack, Raeez Ahmed Shariah: An efficiency analysis |
| thesis_degree_str | Master's |
| title | Shariah: An efficiency analysis |
| title_full | Shariah: An efficiency analysis |
| title_fullStr | Shariah: An efficiency analysis |
| title_full_unstemmed | Shariah: An efficiency analysis |
| title_short | Shariah: An efficiency analysis |
| title_sort | shariah an efficiency analysis |
| topic | Economics |
| url | http://hdl.handle.net/11427/35965 |
| work_keys_str_mv | AT modackraeezahmed shariahanefficiencyanalysis |