PROFIT-SHARING VS. INTEREST-BASED MODELS: A COMPARATIVE ANALYSIS IN THE INDIAN CONTEXT
Keywords:
Alternative financial models, Shariah-compliant finance, Debt vs. equity financing, Economic impact of financial models, Investment risk analysis, Islamic banking, Risk-sharing mechanism, Economic sustainability, Banking preferences in IndiaAbstract
This study explores the profit-sharing and interest-based financial models in India, focusing on their impact on businesses, employees, and the overall economy. While profit-sharing fosters a collaborative work environment by distributing company profits, interest-based models provide fixed returns through loans and investments. Using survey data from 80 respondents, we conduct hypothesis testing using SPSS to examine the relationship between education, religious beliefs, banking familiarity, and financial model preference. Findings indicate that financial literacy, risk perception, and profitability drive model selection more than demographic factors. This paper provides a comparative analysis of these models and suggests policy recommendations for financial inclusion and economic growth in India.
