“Investment and Income distribution pattern under Musharka Finance: the uncertainty case,” (with Shameem Siddiqui) Pakistan Journal of Applied Economics, Vol. 8 No. 1, Summer 1989.
ABSTRACT
In the present study we extend the model presented in Siddiqui and Zaman [The Certainty Case (1989)] in order to include the element of uncertainty. We find total investment higher when the mode of finance is close to Musharka finance. The income distribution pattern is favorable to providers of funds when output (profit) is higher and vice versa. These results have profound implications for Islamic banking for they reveal that profits of banks and depositors would be higher during booms at the expense of producers. On the other hand any shock would be shared by a larger group of economic agents.
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