Project Financing under Conventional and Islamic Banking: A Comparison

Bc. Andrej Štibor, MBA

Master's thesis

Anotácia:

The goal of this thesis is to compare conventional and Islamic financing for a project and test the hypothesis that using Islamic financing would be cheaper than the conventional alternative. The side goal of the thesis is to determine the project’s financial viability using NPV. The theoretical part is concerned with the current state of debt, how debt is still scarce for SME’s, and explains the basics of Islamic banking. The practical part compares estimated financing terms and calculates the project’s NPV. The end result is that conventional financing is in fact cheaper and the hypothesis is wrong. The project also has a positive NPV after ten years under conventional financing.

Abstract:

The goal of this thesis is to compare conventional and Islamic financing for a project and test the hypothesis that using Islamic financing would be cheaper than the conventional alternative. The side goal of the thesis is to determine the project’s financial viability using NPV. The theoretical part is concerned with the current state of debt, how debt is still scarce for SME’s, and explains the basics of Islamic banking. The practical part compares estimated financing terms and calculates the project’s NPV. The end result is that conventional financing is in fact cheaper and the hypothesis is wrong. The project also has a positive NPV after ten years under conventional financing.

Keywords

Islamic banking, Islamic finance, conventional banking, Istisna, SME debt, cost of credit

Jazyk práce: English

Datum vytvoření / odevzdání či podání práce: 15. 4. 2015

Obhajoba závěrečné práce

• Obhajoba proběhla 26. 6. 2015
• Vedúci: MBA David Muir
• Oponent: MBA Jaromír Stemberg

University of Finance and Administration

Master programme / odbor:
Economics and Management / Business Management and Corporate Finance & Master of Business Administration