Siti Raihana Hamzah [Supervisor]Umul Ain’syah Binti Sha’ari2024-05-292024-05-292023-05Umul Ain’syah Sha’ari. (2023). Comparative Models Between Equity-Based and Debt-Based Financing to Achieve Financial Sustainability [Master’s thesis, Universiti Sains Islam Malaysia]. USIM Research Repository.https://oarep.usim.edu.my/handle/123456789/12666Matric: 3201041 (FST)-Restricted until May 2026The contemporary financial system has long recognized debt as a convenient financial instrument. Nevertheless, following the crisis of 2007/2008, debt instruments were deemed to become the root cause of the global economic collapse. Since then, policymakers and economists have struggled to find ways to escape from interest-based financing to achieve better overall stability.Many efforts have beenmade, yet global debt is still at an enduring level. Hence, this research further explores the issue by demonstrating the potential of equity-based financing in the financial system based on several measures. Firstly, this research develops a proposed framework of equity-based over debt-based financing. Secondly, this research investigates credit risk exposure via the simulation of a sample company’s equity-based and debt-based financing. Lastly, this research examines the feasibility of equity-based financing to promote the financial sustainability to company and investors across 4 economic phases. Monte Carlo Simulation is applied to explore a company’s risk and returns performance when issuing equity-based and debt-based financing. Given the simulated scenarios for ten years period of Nestle Malaysia Berhad, the result highlights the potential of equity-based financing to reduce credit risk exposure when returns are based on the company’s performance. Additionally, equity-based financing provides low credit risk exposure, even for low-profitable companies. The simulation is repeated for 12 sectors across four different economic phases from 2007 until 2021 to check the robustness of equity-based financing. The result also highlights equity-based financing’s ability to achieve financial sustainability during different economic phases. Equity-based financing can therefore be an effective substitute for the current financing structure for those looking to enhance long-term sustainability despite a financial crisis. For future study, this research suggests the implementation of equity-based financing with a new Malaysian benchmark - Malaysia Overnight Rate (MYOR) from the lender’s perspective to enhance the credibility of equity financing.en-USequity-based, risk-sharing, social impact, financial sustainability, Islamic financedebt instrumentsThesis