Which Firms Use Islamic Financing?

Posted: 14 Jun 2017

See all articles by Marizah Minhat

Marizah Minhat

Edinburgh Napier University; Edinburgh Napier University

Nazam Dzolkarnaini

University of Salford - Salford Business School

Date Written: October 13, 2016

Abstract

This study explores to what extent the Islamic financing instruments are used by non-financial firms. Based on a panel data of firms from fourteen developing countries for the 2005–2009 period, we find that Islamic financing forms a significant share of the users’ capital structures. Less profitable firms are found more likely to use debt than equity in which case Islamic instruments were preferred over conventional debt. The finding suggests that Islamic financing does benefit less profitable firms, which is consistent with the agency cost perspective.

Keywords: Islamic Finance, Capital Structure, Agency Cost

JEL Classification: C33, G32, Z12

Suggested Citation

Minhat, Marizah and Minhat, Marizah and Dzolkarnaini, Nazam, Which Firms Use Islamic Financing? (October 13, 2016). Economics Letters, Vol. 150, pp.15-17, January 2017, Available at SSRN: https://ssrn.com/abstract=2985819

Marizah Minhat

Edinburgh Napier University

School of Accounting, Economics and Statistics
Craiglockhart Campus
Edinburgh, Scotland EH14 1DJ
United Kingdom

Edinburgh Napier University ( email )

Edinburgh, EH10 5LG
United States

Nazam Dzolkarnaini (Contact Author)

University of Salford - Salford Business School ( email )

University of Salford
The Crescent
Salford, Greater Manchester M5 4WT
United Kingdom
+44 (0) 161 295 2535 (Phone)
+44 (0) 161 295 5022 (Fax)

HOME PAGE: http://business.salford.ac.uk/staff/nazamdzolkarnaini

Do you have negative results from your research you’d like to share?

Paper statistics

Abstract Views
421
PlumX Metrics