Historical development of Islamic venture capital: an appraisal

Venture capital is commonly defined as medium to long-term equity investment provided for unlisted companies to finance their start up, expansion, survival and change of ownership. The origin of which was traced back to mudharabah; which is commonly translated to Islamic limited partnership. The app...

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Main Authors:	Hassan, Rusni, Mikail, Sa'id Adekunle, Arifin, Mahamad
Format:	Article
Language:	English
Published:	American-Eurasian Network for Scientific Information (AENSI), Jordan 2011
Subjects:	HG Finance
Online Access:	http://irep.iium.edu.my/15917/ http://irep.iium.edu.my/15917/ http://irep.iium.edu.my/15917/1/rusni.pdf

id	iium-15917
recordtype	eprints
spelling	iium-159172012-12-20T23:54:40Z http://irep.iium.edu.my/15917/ Historical development of Islamic venture capital: an appraisal Hassan, Rusni Mikail, Sa'id Adekunle Arifin, Mahamad HG Finance Venture capital is commonly defined as medium to long-term equity investment provided for unlisted companies to finance their start up, expansion, survival and change of ownership. The origin of which was traced back to mudharabah; which is commonly translated to Islamic limited partnership. The application of venture capital seems to be abandoned in Muslim world for long, while Western communities get steady development of it. Since the inception of Islamic banks for almost two decades, Islamic banks are also turning a blind eye to venture capital. In spite that venture capital is akin to Islamic bank’s principle of profit and loss sharing. The first Islamic bank which was introduced 1963 at Mit Ghamr by Dr. El-Naggar, was primarily built on mudharabah contract which constitutes a tiny portion in day-to-day operations of Islamic banking and financial institutions to date due to risks associated with this area of investment. However, venture capital considered as a formidable tool for economic and technological development in the West. This study aims at studying historical development of mudharabah and musharakah that constitute the root of the modern venture capital. The study covers both classical and modern Islamic venture capital. The study finds that modern Islamic venture capital operates in form of banking and financial institution at the outset. This is could be imagined with the establishment of the first Islamic bank at Mit Ghamr Egypt 1963, Tabung Hajj at 1960s. On the contrary, Mudharabah Companies established in Pakistan in1984 operates in form of fund management company. Nevertheless, the first fund carries the tittle of Islamic venture is Injazah funds established in 2004.The first fund and management corporation dedicated for Islamic venture capital is Musharaka Venture Tech. and Management established in Malaysia 2008. The first banking institution dedicated for Islamic venture capital and private equity investment is Venture Capital Bank established in Bahrain 2006. The common Shari‘ah applicable principles are musharakah, mudharabah, and wakaalah. Although muzara’ah and musuqat are seldom applied in the agricultural sector. In a nutshell, the study provides Shari‘ah framework for Islamic venture capital and proposes solutions for pressing issues. American-Eurasian Network for Scientific Information (AENSI), Jordan 2011 Article PeerReviewed application/pdf en http://irep.iium.edu.my/15917/1/rusni.pdf Hassan, Rusni and Mikail, Sa'id Adekunle and Arifin, Mahamad (2011) Historical development of Islamic venture capital: an appraisal. Journal of Applied Sciences Research, 7 (SI). pp. 2377-2384. ISSN 1819-544X http://aensionline.com/jasr/jasr/2011/2377-2384.pdf
repository_type	Digital Repository
institution_category	Local University
institution	International Islamic University Malaysia
building	IIUM Repository
collection	Online Access
language	English
topic	HG Finance
spellingShingle	HG Finance Hassan, Rusni Mikail, Sa'id Adekunle Arifin, Mahamad Historical development of Islamic venture capital: an appraisal
description	Venture capital is commonly defined as medium to long-term equity investment provided for unlisted companies to finance their start up, expansion, survival and change of ownership. The origin of which was traced back to mudharabah; which is commonly translated to Islamic limited partnership. The application of venture capital seems to be abandoned in Muslim world for long, while Western communities get steady development of it. Since the inception of Islamic banks for almost two decades, Islamic banks are also turning a blind eye to venture capital. In spite that venture capital is akin to Islamic bank’s principle of profit and loss sharing. The first Islamic bank which was introduced 1963 at Mit Ghamr by Dr. El-Naggar, was primarily built on mudharabah contract which constitutes a tiny portion in day-to-day operations of Islamic banking and financial institutions to date due to risks associated with this area of investment. However, venture capital considered as a formidable tool for economic and technological development in the West. This study aims at studying historical development of mudharabah and musharakah that constitute the root of the modern venture capital. The study covers both classical and modern Islamic venture capital. The study finds that modern Islamic venture capital operates in form of banking and financial institution at the outset. This is could be imagined with the establishment of the first Islamic bank at Mit Ghamr Egypt 1963, Tabung Hajj at 1960s. On the contrary, Mudharabah Companies established in Pakistan in1984 operates in form of fund management company. Nevertheless, the first fund carries the tittle of Islamic venture is Injazah funds established in 2004.The first fund and management corporation dedicated for Islamic venture capital is Musharaka Venture Tech. and Management established in Malaysia 2008. The first banking institution dedicated for Islamic venture capital and private equity investment is Venture Capital Bank established in Bahrain 2006. The common Shari‘ah applicable principles are musharakah, mudharabah, and wakaalah. Although muzara’ah and musuqat are seldom applied in the agricultural sector. In a nutshell, the study provides Shari‘ah framework for Islamic venture capital and proposes solutions for pressing issues.
format	Article
author	Hassan, Rusni Mikail, Sa'id Adekunle Arifin, Mahamad
author_facet	Hassan, Rusni Mikail, Sa'id Adekunle Arifin, Mahamad
author_sort	Hassan, Rusni
title	Historical development of Islamic venture capital: an appraisal
title_short	Historical development of Islamic venture capital: an appraisal
title_full	Historical development of Islamic venture capital: an appraisal
title_fullStr	Historical development of Islamic venture capital: an appraisal
title_full_unstemmed	Historical development of Islamic venture capital: an appraisal
title_sort	historical development of islamic venture capital: an appraisal
publisher	American-Eurasian Network for Scientific Information (AENSI), Jordan
publishDate	2011
url	http://irep.iium.edu.my/15917/ http://irep.iium.edu.my/15917/ http://irep.iium.edu.my/15917/1/rusni.pdf
first_indexed	2023-09-18T20:24:49Z
last_indexed	2023-09-18T20:24:49Z
_version_	1777408346386595840

Historical development of Islamic venture capital: an appraisal

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