Islamic corporate finance: Capital structure

Document Type

Syllabus

Publication Date

6-4-2019

Abstract

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.

Identifier

85108042437 (Scopus)

ISBN

[9781138480919, 9781351061490]

Publication Title

Islamic Corporate Finance

External Full Text Location

https://doi.org/10.4324/9781351061506-3

First Page

54

Last Page

73

This document is currently not available here.

Share

COinS