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Abstract
In Uzbekistan, many young people want to start small businesses. However, it is very hard for them to get money from traditional banks. The main reason is the “collateral rule”. Banks ask for houses or real estate that are worth 120% more than the loan. This paper explains why this rule is stopping economic growth. It also shows how Islamic Finance, specifically the Profit and Loss Sharing (PLS) system, can fix this problem. By using simple comparisons and tables, this paper proves that Islamic banking is a better choice for small and medium enterprises (SMEs) in Uzbekistan.
References
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