09-12-2017, 03:40 PM | #31 | |
Join Date: Jul 2007
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Re: [Spaceships] Islamic Banking and Financing Spaceships Purchases
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Or do you mean the borrower saves up enough to pay back the original loan plus some additional amount, however determined? Honest Eneri's Bank and Grill loans Qumel 1,000,000 plutons to buy a merchant starship. In return HEBaG gets 10% of the profit. Lets say the adjustment is 200,000 plutons. Does Qumel own the ship free and clear once they have made 12 million plutons and paid a cumulative 1,200,000 plutons to HEBaG? Or does Qumel need to save up 1,200,000 plutons from their 90% and then pay it too HEBaG to be free and clear? On top of the 10% share they have been paying?
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09-12-2017, 03:55 PM | #32 | |
Join Date: Dec 2007
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Re: [Spaceships] Islamic Banking and Financing Spaceships Purchases
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I caution that there's a lot of guesswork in my understanding of the real deal, but since this is a fictional setting, I think it's a workable approach. |
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09-12-2017, 04:01 PM | #33 |
Join Date: Feb 2005
Location: Berkeley, CA
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Re: [Spaceships] Islamic Banking and Financing Spaceships Purchases
If the bank is a silent partner, that 10% means that the bank owns 10% of the ship, and therefore gets 10% of the profits, until they sell the 10% share. It's possible that the contract with the bank permits Qumel to buy that 10% share back at some later point at a fixed value, in which case, when the appropriate time arrives, they have the option of buying their share back (and most likely, this price has nothing to do with what profit you've made in the interim).
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09-12-2017, 04:24 PM | #34 | |
Night Watchman
Join Date: Oct 2010
Location: Cambridge, UK
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Re: [Spaceships] Islamic Banking and Financing Spaceships Purchases
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By contrast, one representative can handle many businesses if they're all in the same city. That's much less expensive.
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09-12-2017, 04:26 PM | #35 |
Join Date: Aug 2008
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Re: [Spaceships] Islamic Banking and Financing Spaceships Purchases
It is worth noting that there is a BIG difference between profit and dividends. A corporation can, say, be very profitible and have its board vote to withhold dividend payments to its shareholders so the corporation can build up capital more quickly. There are lots of reasons to do this that I won't go into, but to say "Bob gets x% of the profits" either refers to dividends (which can be withheld) or the actual profits (specify gross or net!) and is potentially a deep cut into the business' future capabilities (some industries have profit margins at or below 1%).
Now owning shares in a corporation generally proves profitable when you sell those shares. Ideally, they accrue value with time and you selk them for more than you paid for them. Thus, I could see a bank owning 10% share in a corporation, and the private owner having to pay fair market value for those shares when he wants them back. And the bank could then liquidate those shares if it needs the capital contained therein. I'm not sure how that would apply to non-corporations, though. Having a 10% share of a car is inherently a losing proposition. They devalue tremendously with time, so you could never sell your share for more than you paid for it, and the "borrower" could buy you out for less than you loaned the minute he pulls out of the dealership. The car thing is just an example, but there are other consumer goods that this would also apply to - potentially even spaceships.
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09-12-2017, 04:33 PM | #36 |
Join Date: Feb 2005
Location: Berkeley, CA
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Re: [Spaceships] Islamic Banking and Financing Spaceships Purchases
It pretty much doesn't, though it's also possible to have a scheme where the debt holder simply rents his share back to the main user.
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09-12-2017, 05:18 PM | #37 |
Join Date: Aug 2008
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Re: [Spaceships] Islamic Banking and Financing Spaceships Purchases
I don't see the distinction between that and Rent-to-Own. And if you can't make money on loans, rent to own schemes are really just skirting around the no usury rules on a technicality. Mind you, that is amazingly close to how most anything works in the real world (Me? Cynical? Naaaaw!), but I'm not sure that's what Vicky (OP) is looking for. Maybe we can get clarification from him tomorrow?
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09-12-2017, 05:27 PM | #38 | |
Wielder of Smart Pants
Join Date: Aug 2004
Location: Ventura CA
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Re: [Spaceships] Islamic Banking and Financing Spaceships Purchases
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It won't have much effect on the game mechanics in Spaceships, as abstracted as they are already. |
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09-12-2017, 05:39 PM | #39 |
Join Date: Feb 2005
Location: Berkeley, CA
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Re: [Spaceships] Islamic Banking and Financing Spaceships Purchases
Well, there may not actually be a 'to-Own' part of it. In any case, is rent to own a problem under Islamic law? My guess is that the big incentive for anti-usury rules is people getting trapped by unsustainable interest payments, and with rent to own you have the option of simply stopping renting (and if the rented asset is lost, you obviously do so) -- this is likely to be expensive, but it's a reasonably fixed cost (this same objective is accomplished by bankruptcy laws).
Last edited by Anthony; 09-12-2017 at 05:47 PM. |
09-12-2017, 05:46 PM | #40 | |
Wielder of Smart Pants
Join Date: Aug 2004
Location: Ventura CA
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Re: [Spaceships] Islamic Banking and Financing Spaceships Purchases
My understanding is that some variation of rent-to-own is the standard form of financing in predominantly Islamic nations.
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Tags |
financing, islamic banking, spaceships, usury |
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