Article: Sahulat Journal, Vol.7, No. 1, December 2018 and June 2019
Dr. Waquar Anwar1
The word Equity carries different meanings in different contexts. A closer study would show that all the applications of the word are connected to each other and are manifestations of human welfare. In law, it is used to represent a situation where any allowance is sought to be provided over and above the common law and it is akin to the concept of istihsan in Islamic parlance. In social welfare, equity connotes benefits beyond the strict contours of justice, which is referred to as ihsan in the holy Quran. The third and the most popular use of the word is in economics and finance where it refers to provision of funds on the basis of sharing of risks as against debt which entails transfer of risk in any venture.
The heavy dependence of the economy on debt has ruined its fabric and is causing insurmountable hardships to the common man. There is a need to dispel the feeling that an economy cannot survive on equity. The discussion is required both on the feasibility and viability of equity-based economy and a roadmap should be drawn for transformation of the economy from the present time to the future so that human suffering can be turned into welfare.
Equity in corporate finance is attainable both in arranging financial resources for a business and their optimum utilisation. Practical examples and empirical studies support this conjecture, rather inference.
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