Abstract
A vicious cycle of interest rates and debt have stunted the growth of developing nations, and this chapter explores the alternatives that Islamic finance and risk sharing have to offer at a sovereign level. While not only focusing on the how, this chapter delves into proposing a macro risk sharing instrument which brings to the forefront the concept of an equitable in nature GDP-linked paper, which allows for enhanced risk sharing based sovereign financing. While the chapter delves into the conceptual merits of this kind of risk sharing instrument, it also presents an empirical inquiry on the performance of this proposed instrument for a wide array of developing nations.
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Rizvi, S.A.R., Bacha, O.I., Mirakhor, A. (2016). Macro Market Application. In: Public Finance and Islamic Capital Markets. Palgrave Studies in Islamic Banking, Finance, and Economics. Palgrave Macmillan, New York. https://doi.org/10.1057/978-1-137-55342-3_7
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DOI: https://doi.org/10.1057/978-1-137-55342-3_7
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