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Document Details
Document Type
:
Article In Journal
Document Title
:
Debt and Equity in a Primary Financial Market: A Theory with Islamic Implications
سندات الدين والأسهم في سوق مالية أولية ـ نظريتها ودلالاتها الإسلامية
Subject
:
Articles
Document Language
:
English
Abstract
:
Emphasizing risk averse nature of fund suppliers in an uncertain environment, this paper establishes the possibility of a riba-free Pareto optimality in a primary financial market, explaining real life dominance of the mixed debt/equity system in terms of deviation from informational efficiency. Risk premia normally associated with equity returns are definite indicators of risk-aversion on the part of demand side real investors. Under totally undiversifiable risk, a financial investor may prefer equity to risk free asset even though he is more risk-averse than the demand side issuer of equity. It concludes that free market dynamic forces generate a financial order giving privileges to active demanders of funds rather than sympathizing' with risk-averse suppliers of funds as conventional analysis implies. Theoretical claims of efficiency losses in the financial supply process due to Islamization appear to be groundless.
ISSN
:
1018-7383
Journal Name
:
Islamic Economics Journal
Volume
:
4
Issue Number
:
1
Publishing Year
:
1412 AH
1992 AD
Number Of Pages
:
30
Article Type
:
Article
Added Date
:
Sunday, October 11, 2009
Researchers
Researcher Name (Arabic)
Researcher Name (English)
Researcher Type
Dr Grade
Email
سيفالدين إبراهيم تاجالدين
SEIF I. TAGEL-DIN
Researcher
Files
File Name
Type
Description
21007.pdf
pdf
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