A Modern Perspective of Islamic Economics and Finance by Gundogdu Ahmet Suayb;

Author:Gundogdu, Ahmet Suayb;
Language: eng
Format: epub
Publisher: Emerald Publishing Limited
Published: 2018-12-14T00:00:00+00:00

4.1. FINANCING WORKING CAPITAL

As long as there is a bona fide transaction, a way can be found to develop shari’ah-compliant products to support value-adding transactions. Islamic working capital finance contracts can be categorized, in a way that is akin to a separation of the balance sheet, into account payables and receivables. Both receivable finance and payable finance can be asset-based or asset-backed. If a company gives the control of goods to financiers as collateral, financing is called asset-backed. Asset-based refers to an obligation to financiers created from bona fide sales without the financier obtaining control of the collateral given for the financed goods. Fig. 5 illustrates the categorization.

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