Some aspects of small business financing through profit and loss sharing model in Islamic economic doctrine
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Date
2019-04
Journal Title
Journal ISSN
Volume Title
Publisher
ISMA University
Abstract
There have been at least two distinctive approaches to try to overcome the SME finance gap. The first has been to broaden the collateral
based approach by encouraging bank lenders to finance SMEs with insufficient collateral. This might be done through an external party
providing the collateral or guarantees required. The second approach has been to broaden the viability based approach. Since the viability
based approach is concerned with the business itself, the aim has been to provide better general business development assistance to reduce
risk and increase returns. These two approaches in overcoming the SME finance gap are implemented and consistent with Profit and Loss
Sharing Model, also called PLS or “participatory” banking. Profit and Loss Sharing is a method of finance used by Islamic financial or
Shariah-complaint institutions to comply with the religious prohibition on interest on loans that many Muslims subscribe to.
Description
Keywords
small business financing, under capitalization, Profit and Loss Sharing Model, SME finance gap, Islamic finance
Citation
Panchenko Y. Some aspects of small business financing through profit and loss sharing model in Islamic economic doctrine / Yevhen Panchenko, Oleh Mozgovyi, Oxana Yurkevich // Information Technologies, Management and Society : 17th International Scientific Conference Information Technologies and Management, 2019 April 25–26 / ISMA University [et al.] ; [ed.: V. I. Gopejenko, N. Burlucka]. – Riga : ISMA, 2019. – P. 176–177.