Tag: Islamic Finance

Leveraging on Private Philanthropy in Pakistan for Establishing Waqf

With a predominantly Muslim population which engages in significant private giving, social intermediaries who can transparently and efficiently mobilize charitable giving can enhance the socio-economic impact of private giving. Given the high prevalence of cash based giving and higher trust deficit between people and the public Zakat agency, the Islamic institution of cash Waqf can be suitable for effectively channelizing the charitable giving in the form of cash.

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Future Sukuk Growth Depends on Overcoming Challenges

Sukuk issuance needs to be used in providing finance for diverse needs. Corporate issuances follow the trends in business cycles. Sovereign Sukuk for development finance can provide impetus to the Sukuk issuance in cyclical downturns. In addition to that, it can also provide long-term macroeconomic support to the governments and enterprises by building the infrastructure for tomorrow.

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Potential of Islamic Finance to Lead New Financial Architecture

The two most important problems identified in a post-financial crisis look back are perverse incentives and de-linking of financial sector growth and activities with the real sector of the economy. Islamic finance principles by basing all financial products with real assets fill the gap and this feature alone is a very important risk management tool inbuilt into the system.

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Economic Merits of Islamic Modes of Financing

From the risk and profitability perspective, Islamic modes of financing keep the Islamic financial system liquid and less prone to risk due to asset backing. Often, the investors with bank (the deposit holders) are risk averse and want consistent returns. But, small savers do not have enough funds to finance big volume projects directly. But, using investors’ pool of funds to provide financing, the investors are able to share in benefit of such economic activities.

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