Islamic finance merging public finance within public–private partnership
International Journal of Islamic and Middle Eastern Finance and Management
ISSN: 1753-8394
Article publication date: 11 August 2020
Issue publication date: 8 September 2020
Abstract
Purpose
This paper aims to describe cooperation between public and private market players from different legal and religious orders. The author argues that such public–private partnerships (PPPs) enable the development of a possible convergence between selected areas of mainstream public finance and the Islamic moral economy (IME).
Design/methodology/approach
This paper explores the theory of both mainstream finance and the IME, and using deductive reasoning from axioms, develops the assumptions of a theoretical approach to heterodox PPP. The proposed method affects the ability to find common platforms between mainstream public finance and the IME, through the example of public–private investment projects.
Findings
This endeavour is subject to trade-offs between profit maximisation and social justice values on the basis of long-term PPP contracts. The author shows the assumptions under which this compromise would be beneficial to public entities, multicultural societies and conventional and Islamic investors. It is proposed to distribute profit to the owners up to a predetermined value, above which the PPPs would finance public services for persons otherwise excluded from them.
Originality/value
The success of this approach must depend on a compromise between profit maximisation as the sole investment objective and investment guided by social justice values. Private investors can achieve a capped level of profit on a long-term contract basis, and public partners can obtain long-term contracts for providing public goods. Both would undertake a project with a strong emphasis on corporate social responsibility, with particularly large opportunities in developing Islamic countries.
Keywords
Citation
Kociemska, H. (2020), "Islamic finance merging public finance within public–private partnership", International Journal of Islamic and Middle Eastern Finance and Management, Vol. 13 No. 4, pp. 579-592. https://doi.org/10.1108/IMEFM-01-2018-0022
Publisher
:Emerald Publishing Limited
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