Title: Towards a new model of productive Islamic financial mechanisms

Authors: Chokri Kooli; Mohammed Shanikat; Raed Kanakriyah

Addresses: Lusail University, Zone 69, St 100, Building 333, Lusail, Doha, Qatar ' Faculty of Business, Al-Balqa Applied University, Amman, Jordan ' Faculty of Business, Al-Balqa Applied University, Amman, Jordan

Abstract: The challenge for Islamic finance institutions is to find solutions and develop programs helping to invest their funds in supporting projects, SMEs, and entrepreneurship. In this paper, a documental collection, revision, and analysis were performed to review the efficacy of the main mechanisms used by Islamic financial institutions to finance their customers. The central research question consists of examining whether the actual offerings of Islamic finance mechanisms reflect the positive value and impact of Islamic finance to the economy and society. Among other things, the results showed that some Islamic financial institutions developed several types of financial mechanisms that are majority oriented through corporate finance. The research turned off with the common assumption stipulating that murabaha deals more with consumer credit rather than corporate finance. Findings showed that out of three programs of murabaha, two are oriented through corporate finance, and the third one could be assimilated as a positive investment even if it provides consuming financing. The research suggests that Islamic financial institutions must continue their innovating efforts to shift the offer of Islamic financial programs and products from consumer to corporate finance. Findings are supported by the development of a new model of productive Islamic finance mechanisms.

Keywords: Islamic finance mechanisms; best practices; new model; corporate finance; sustainability.

DOI: 10.1504/IJBPM.2022.119551

International Journal of Business Performance Management, 2022 Vol.23 No.1/2, pp.17 - 33

Received: 25 May 2020
Accepted: 26 Jun 2020

Published online: 09 Dec 2021 *

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