Financial Innovation in an Islamic Setting: The Case of Pakistan

摘要

The financial system in Pakistan is undergoing dramatic changes. First, the introduction of Islamic modes of financing led to the creation of new financial institutions--leasing companies and modarabas (essentially closed end mutual funds) and instruments such as the musharika and morabaha. With a radical program of financial sector reform initiated in the early 1990s, the government has started a process of liberalization, deregulation and privatization. The swiftness of these changes has caught the participants in the financial markets by surprise. The definitions and roles of the past have suddenly become redundant. Many observers feel an exciting future is opening up. This future will be dominated by those who are creative, pioneering and iconoclastic. This paper focuses on the development of and problems facing two key areas of non-bank financing: Modarabas and leasing companies.