Islamic corporate finance: capital structure
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The capital structure choices of a firm not only determine the current value of the firm, but also largely determine its long-term survival. Modigliani and Miller's seminal 1958 paper explicates conventional firms' capital structure choices. However, we are yet to develop a solid theoretical framework about the financing decisions of Islamic firms. This is a review chapter on current developments in the field of Islamic capital structure. The chapter starts with a short discussion about the various sources of capital and their advantages and disadvantages, followed by a detailed description of traditional capital structure theories and their real-world empirical evidence. Finally, it discusses how the capital structure decision for Islamic firms differs from that for conventional firms, and the role sukuk, dual-banking system, and debt threshold play in determining Islamic firms' capital structure
Islamic corporate finance , Capital structure
Mohd Rasid, Mohamed Eskandar Shah and Uddin, Ajim and Chowdhury, Mohammad Ashraful Ferdous. (2019). Islamic corporate finance: capital structure. In M. Kabir Hassan, Mamunur Rashid and Sirajo Aliyu (Eds.), Islamic corporate finance (pp. 54-73). London: Taylor & Francis.
Taylor & Francis