A critique of the diminishing balance method of islamic home financing - response

Hasan, Zubair (2013): A critique of the diminishing balance method of islamic home financing - response.

Abstract

This paper responds to the criticism of the Zubair Diminishing Balance model for Islamic home financing that Ahmad Kameel Meera published in the ISRA Journal. The response argues that most of the comments of Meera are frivolous and misplaced. It reiterates that the ZDBM is much different from other models; it is cheaper for the customer without being costlier to the bank, more efficient in resource allocation and improves liquidity in the financial system. However, the mathematical appendix is a positive contribution of Meera's paper.

• Item Type: MPRA Paper
• Language: English
• Keywords: Islamic home financing, conventional model; BBA; MMP; ZDBM; Segmental murabahah
• Subjects: G - Financial Economics > G2 - Financial Institutions and Services > G20 - General; G - Financial Economics > G2 - Financial Institutions and Services > G21 - Banks ; Depository Institutions ; Micro Finance Institutions ; Mortgages

References

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Chambers, M. S, Garage, C and Sehlagehauf, D (September 2007): Mortgage contracts and housing tenure decisions, Working Paper, Federal Reserve Bank of St. Louis (Research Division), pp. 1-40.

Hasan, Zubair (2012): Islamic norms, Excel formula and Islamic home financing models, working paper, MPRA # 4835 ‘Zubair Hasan at IDEAS.

Hasan Zubair (2011): Islamic home finance in the social mirror, ISRA: International Journal of Islamic Finance, Vol. 3, No.1 June.

Meera, A. K. M & Razak, D. A (2009): Home financing through the MusharakahMutanaqisah contracts: some practical issues, JKAU: Islamic Economics, Vol. 22, No.1, pp. 3-25.

Meera, A.K (2012): A critique of diminishing balance method of Islamic home financing, ISRA International Journal of Islamic Finance, Vol. 4 Issue 2 December.