A benchmark modelling for participation-based tax increment financing
Yükleniyor...
Dosyalar
Tarih
2020
Yazarlar
Dergi Başlığı
Dergi ISSN
Cilt Başlığı
Yayıncı
Emerald Publishing
Erişim Hakkı
info:eu-repo/semantics/openAccess
Özet
Purpose – This paper aims to present the theoretical and conceptual framework of a new method in public finance called “participation based tax increment financing (P-TIF)” by combining conventional tax increment financing (TIF) within the Shar??ah-compliance structure. Design/methodology/approach – This study develops a benchmark model for P-TIF, which offers a participative contract between both lender and borrower. With the help of this model, a financing schema in P-TIF is established by incorporating stochastic modelling. Possible implications and alternative options of application are also explored with a discussion of challenges. Findings – The results mainly indicate that P-TIF promises lenders to be a part of increment from tax earnings, in return for a reduced interest rate. They show how a rise in participation of the lender in a given contract lowers the interest rate. Under the base case scenario, the interest rate is reduced to zero when the participation of the lender in tax increment is set at 50%. Practical implications – With the feature of being interest-free, P-TIF can be implied also within the Shar??ah-compliance framework, thanks to the model it is based on. Additionally, as the model in this paper is parametric, it can be applicable to various cases in Islamic finance. Originality/value – To the best of our knowledge, this is the first paper in the literature in the sense that it provides a conceptual idea and respective model for TIF method within a Shar??ah-compliance framework.
Açıklama
Anahtar Kelimeler
Public Finance, Tax Increment Financing, Islamic Finance and Banking, Stochastic Modelling
Kaynak
ISRA International Journal of Islamic Finance
WoS Q Değeri
Q4
Scopus Q Değeri
Q3
Cilt
12
Sayı
2
Künye
Varlı, Y. ve Övenç, G. (2020). A benchmark modelling for participation-based tax increment financing. ISRA International Journal of Islamic Finance, 12(2), 253-264.
