Continuation
An Islamic financing is – after all – a financial product
with certain characteristics.
One of these being that it is made in accordance with the
Shari’ah.
The text that prohibits interest payments, i.e:
-
the Quran
-
and the Hadeeth
also prohibits the misappropriation of other people’s property
(“the eating of other people’s money in an unlawful way”).
Those who choose to abide by one rule (i.e. the avoidance of
interest payments) are also expected to have a higher propensity to follow
another rule (i.e. “do not default”).
Therefore, if borrowers obtain Islamic financing because of
their religious motives, one should observe a lower rate of default on Islamic
financing.
From the research
paper of European Central Bank
(Authors:
F.Mauro, P.Caristi, S.Couderc, A.D.Maria, L.Ho, B.K.Grewal, S.Masciantonio, S. Ongena and S.Zaher)
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