A literature review of financial contracting theory from the Islamic and conventional overviews: contributions, gaps, and perspectives

This paper discusses the financial contracting theory from the conventional and Islamic perspectives. It provides an overview of the contributions in this field and discusses the gaps in the literature. In addition, it proposes two relevant approaches namely the financial contracting enforceability...

Full description

Bibliographic Details
Main Authors:	Ajmi, Hechem, Kassim, Salina, Abd Aziz, Hassanuddeen, Mansour, Walid
Format:	Article
Language:	English English
Published:	King Abdulaziz University Scientific Publishing Center 2019
Subjects:	HG3368 Islamic Banking and Finance
Online Access:	http://irep.iium.edu.my/77577/ http://irep.iium.edu.my/77577/ http://irep.iium.edu.my/77577/ http://irep.iium.edu.my/77577/1/Prof.%20Hassan%20-%20A%20Literature%20Review%20of%20Financial%20Contracting%20Theory%20from%20the%20Islamic%20and.pdf http://irep.iium.edu.my/77577/7/77577_A%20literature%20review%20of%20financial%20contracting%20theory%20from%20the%20Islamic%20and%20conventional%20overviews-%20Contributions%2C%20gaps%2C%20and%20perspectives_Scopus.pdf

id	iium-77577
recordtype	eprints
spelling	iium-775772020-02-12T08:27:22Z http://irep.iium.edu.my/77577/ A literature review of financial contracting theory from the Islamic and conventional overviews: contributions, gaps, and perspectives Ajmi, Hechem Kassim, Salina Abd Aziz, Hassanuddeen Mansour, Walid HG3368 Islamic Banking and Finance This paper discusses the financial contracting theory from the conventional and Islamic perspectives. It provides an overview of the contributions in this field and discusses the gaps in the literature. In addition, it proposes two relevant approaches namely the financial contracting enforceability approach and the adverse selection analysis in order to deal with conflicts of interest among economic agents. The first approach is meant to assess the contract that maximizes the value of the firm subject to the enforcement constraint for the agent and the participation constraint for the principal. The second approach considers an adverse selection framework in order to determine the principal’s subjective perception of the risk of default when equity and debt financings are used. Similarly, it suggests avenues for future research. Firstly, it calls for a deeper understanding of venture capital as a potential model of mushārakah. Secondly, it puts stress on the importance of examining crowd-funding functioning from the principal-agent point of view. Thirdly, it sheds some light on the necessity to yield financial explanation about the excessive use of murābaḥah instead of ijārah. In a nutshell, we assume that the alternative approaches can be adopted to provide relevant insights regarding the proposed future researches. King Abdulaziz University Scientific Publishing Center 2019-07 Article PeerReviewed application/pdf en http://irep.iium.edu.my/77577/1/Prof.%20Hassan%20-%20A%20Literature%20Review%20of%20Financial%20Contracting%20Theory%20from%20the%20Islamic%20and.pdf application/pdf en http://irep.iium.edu.my/77577/7/77577_A%20literature%20review%20of%20financial%20contracting%20theory%20from%20the%20Islamic%20and%20conventional%20overviews-%20Contributions%2C%20gaps%2C%20and%20perspectives_Scopus.pdf Ajmi, Hechem and Kassim, Salina and Abd Aziz, Hassanuddeen and Mansour, Walid (2019) A literature review of financial contracting theory from the Islamic and conventional overviews: contributions, gaps, and perspectives. Journal of King Abdulaziz University: Islamic Economics, 32 (2). pp. 25-42. https://iei.kau.edu.sa/Pages-CVol-32-2.aspx DOI:10.4197/Islec. 32-2.2
repository_type	Digital Repository
institution_category	Local University
institution	International Islamic University Malaysia
building	IIUM Repository
collection	Online Access
language	English English
topic	HG3368 Islamic Banking and Finance
spellingShingle	HG3368 Islamic Banking and Finance Ajmi, Hechem Kassim, Salina Abd Aziz, Hassanuddeen Mansour, Walid A literature review of financial contracting theory from the Islamic and conventional overviews: contributions, gaps, and perspectives
description	This paper discusses the financial contracting theory from the conventional and Islamic perspectives. It provides an overview of the contributions in this field and discusses the gaps in the literature. In addition, it proposes two relevant approaches namely the financial contracting enforceability approach and the adverse selection analysis in order to deal with conflicts of interest among economic agents. The first approach is meant to assess the contract that maximizes the value of the firm subject to the enforcement constraint for the agent and the participation constraint for the principal. The second approach considers an adverse selection framework in order to determine the principal’s subjective perception of the risk of default when equity and debt financings are used. Similarly, it suggests avenues for future research. Firstly, it calls for a deeper understanding of venture capital as a potential model of mushārakah. Secondly, it puts stress on the importance of examining crowd-funding functioning from the principal-agent point of view. Thirdly, it sheds some light on the necessity to yield financial explanation about the excessive use of murābaḥah instead of ijārah. In a nutshell, we assume that the alternative approaches can be adopted to provide relevant insights regarding the proposed future researches.
format	Article
author	Ajmi, Hechem Kassim, Salina Abd Aziz, Hassanuddeen Mansour, Walid
author_facet	Ajmi, Hechem Kassim, Salina Abd Aziz, Hassanuddeen Mansour, Walid
author_sort	Ajmi, Hechem
title	A literature review of financial contracting theory from the Islamic and conventional overviews: contributions, gaps, and perspectives
title_short	A literature review of financial contracting theory from the Islamic and conventional overviews: contributions, gaps, and perspectives
title_full	A literature review of financial contracting theory from the Islamic and conventional overviews: contributions, gaps, and perspectives
title_fullStr	A literature review of financial contracting theory from the Islamic and conventional overviews: contributions, gaps, and perspectives
title_full_unstemmed	A literature review of financial contracting theory from the Islamic and conventional overviews: contributions, gaps, and perspectives
title_sort	literature review of financial contracting theory from the islamic and conventional overviews: contributions, gaps, and perspectives
publisher	King Abdulaziz University Scientific Publishing Center
publishDate	2019
url	http://irep.iium.edu.my/77577/ http://irep.iium.edu.my/77577/ http://irep.iium.edu.my/77577/ http://irep.iium.edu.my/77577/1/Prof.%20Hassan%20-%20A%20Literature%20Review%20of%20Financial%20Contracting%20Theory%20from%20the%20Islamic%20and.pdf http://irep.iium.edu.my/77577/7/77577_A%20literature%20review%20of%20financial%20contracting%20theory%20from%20the%20Islamic%20and%20conventional%20overviews-%20Contributions%2C%20gaps%2C%20and%20perspectives_Scopus.pdf
first_indexed	2023-09-18T21:49:25Z
last_indexed	2023-09-18T21:49:25Z
_version_	1777413668431986688

A literature review of financial contracting theory from the Islamic and conventional overviews: contributions, gaps, and perspectives

Similar Items