Munich Personal RePEc Archive

A Suggestion on Mortgage Financing of Islamic Banks: Diminishing Musharakah

Dinc, Yusuf (2016): A Suggestion on Mortgage Financing of Islamic Banks: Diminishing Musharakah. Published in: International Journal of Trade, Economics and Finance, , Vol. 1, No. 8 (15 February 2017): pp. 25-31.

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Participation banks can produce house financing based on mortgage in Turkey. Mortgage of participation banks of Turkey is a type of Murabaha financing. Murabaha financing model is based on buying in advance and selling on credit terms. Other financing models of interest-free banking are not applied to mortgages of participation banks in Turkey. Diminishing Musharakah is an interest-free financing model for any type of credits and also applied to mortgages in the world. In this essay Diminishing Musharakah is argued as a unique financing model of interest-free banking. Also applicability of Diminishing Musharakah for Turkish participation banks’ mortgages is evaluated. The findings that were obtained in Turkey may be generalized for the other regions of the world.*

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