Research Output

Which firms use Islamic financing?

  This study explores to what extent the Islamic financing instruments are used by non-financial firms and whether profitability influences such financing choice. Based on a panel data of firms from fourteen developing countries for the 2005-2009 period, we find that Islamic financing contributes a significant share of the firms’ capital structures. Less profitable firms are found more likely to use debt than equity in which case Islamic instruments were preferred over conventional debt. The finding suggests that Islamic financing does benefit less profitable firms, which is consistent with the agency cost perspective.

  • Type:

    Article

  • Date:

    27 October 2016

  • Publication Status:

    Published

  • DOI:

    10.1016/j.econlet.2016.10.036

  • Cross Ref:

    S0165176516304190

  • ISSN:

    0165-1765

  • Library of Congress:

    HB Economic Theory

  • Dewey Decimal Classification:

    332 Financial economics

Citation

Minhat, M., & Dzolkarnaini, N. (2016). Which firms use Islamic financing?. Economics Letters, 150, (15-17). doi:10.1016/j.econlet.2016.10.036. ISSN 0165-1765

Authors

Keywords

Islamic finance, capital structure, agency cost,

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