By Mohammed Mahmoud Mantai
Abstract
The purpose of this paper is to examine previous studies on the wider access to collateral-free financing in the context of Islamic micro-finance and entrepreneurs through the contracts of trust (Mudarabah and Musharakh) as well as assessing the role of the Waqf institution funds in their facilitation. We find that majority of the previous studies investigated propose the provision of collateral-free financing to the poor and the entrepreneurs and suggest the participation of the Waqf institution but unfortunately there is no specific model developed so far. Therefore, in this paper, we attempt to propose a new model in which Islamic banks can offer collateral-free financing with collaboration with the Waqf institution through the Profit and Loss sharing contracts.
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