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Which firms use Islamic financing?

Minhat, Marizah; Dzolkarnaini, Nazam


Marizah Minhat

Nazam Dzolkarnaini


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.


Minhat, M., & Dzolkarnaini, N. (2017). Which firms use Islamic financing?. Economics Letters, 150, 15-17.

Journal Article Type Article
Acceptance Date Sep 26, 2016
Online Publication Date Oct 27, 2016
Publication Date 2017-01
Deposit Date Oct 3, 2016
Publicly Available Date Apr 28, 2018
Journal Economics Letters
Print ISSN 0165-1765
Publisher Elsevier
Peer Reviewed Peer Reviewed
Volume 150
Pages 15-17
Keywords Islamic finance, capital structure, agency cost,
Public URL


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