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Islamic Banks: Profit Sharing Equity and Credit Control البنوك الإسلامية: ربحية التمويل القائم على الشراكة ومراقبة الائتمان

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  • Zubair Hasan

    (Professor of Islamic Economics and Finance INCEIF: The Global University in Islamic Finance, Kuala Lumpur.)

Abstract

This paper deals with three basic issues in Islamic banking: First, how the profit sharing ratios in mudarabah contracts are in principle determined? Second, do the actual sharing ratios result in an equitable division of profit between the banks on the one hand and the depositors on the other? Finally, can the central bank use the profit sharing ratio along with the rate of interest for credit control so as to mitigate leverage lure in a dual banking system? The paper provides a brief explanation as an answer to the first question. The response to the second is negative but is positive to the third. It suggests a policy tool the central banks can possibly use to prevent the sort of credit turmoil as the world is facing today in 2008 because of leverage lure. The tool may also help improve return to investors and thus establish some equity in the distribution of profits. Keywords: Islamic banking; Two-tier mudarabah; Profit sharing ratio; Division of profit; Leverage lure. تتناول هذه الورقة ثلاث قضايا أساسية تتعلق بالبنوك الإسلامية: أولا، كيفية تحديد نسب المشاركة في الأرباح في عقود المضاربة من حيث المبدأ. ثانيا، هل نسب الأرباح الفعلية تحقق التوزيع العادل للأرباح بين البنوك من جهة والمودعين من جهة أخرى؟ وأخيرا، هل يمكن للبنك المركزي أن يستخدم هذه النسبة جنباً إلى جنب مع معدل الفائدة، لمراقبة حجم الائتمان وذلك لتخفيف ضغط إغراء الرفع المالي في النظام المصرفي المزدوج؟ وتقدم الورقة شرحا موجزا كإجابة على السؤال الأول. أما الإجابة على السؤال الثاني فقد كانت سلبية، في حين أن إجابة السؤال الثالث كانت إيجابية. وتقترح الورقة أداة يمكن استخدامها من قبل البنوك المركزية، ربما لمنع الاضطراب الائتماني من قبيل ذاك الذي عانى منه العالم عام 2008م. الكلمات المفتاحية: البنوك الإسلامية، المضاربة المزدوجة، نسب الأرباح، توزيع الأرباح، الرفع المالي المغري.

Suggested Citation

  • Zubair Hasan, 2010. "Islamic Banks: Profit Sharing Equity and Credit Control البنوك الإسلامية: ربحية التمويل القائم على الشراكة ومراقبة الائتمان," Journal of King Abdulaziz University: Islamic Economics, King Abdulaziz University, Islamic Economics Institute., vol. 23(1), pages 131-147, January.
    • Handle: RePEc:abd:kauiea:v:23:y:2010:i:1:no:5:p:131-147
    DOI: 10.4197/Islec.23-1.5
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    References listed on IDEAS

    as
    1. Hasan, Zubair, 2008. "Credit creation and control: an unresolved issue in Islamic banking," MPRA Paper 8130, University Library of Munich, Germany, revised 07 Apr 2008.
    2. Shamim Ahmad Siddiqui, 2008. "An Evaluation of Research on Monetary Policy and Stability of the Islamic Economic system تقييم الأبحاث المتعلقة بالسياسة والاستقرار المالي لنظام الاقتصاد الإسلامي," Papers and books based on the proceedings of the Conferences organized by the Islamic Economics Institute, KAAU. 51, King Abdulaziz University, Islamic Economics Institute..
    3. Zubair Hasan, 2008. "Credit Creation And Control: An Unresolved Issue In Islamic Banking "توليد" ومراقبة الائتمان: إشكال عالق لدى المصارف الإسلامية," Papers and books based on the proceedings of the Conferences organized by the Islamic Economics Institute, KAAU. 52, King Abdulaziz University, Islamic Economics Institute..
    4. Mohsin S. Khan & Abbas Mirakhor, 1989. "The Financial System and Monetary Policy in an Islamic Economy النظام المالي والسياسة النقدية في اقتصاد إسلامي," Journal of King Abdulaziz University: Islamic Economics, King Abdulaziz University, Islamic Economics Institute., vol. 1(1), pages 39-57, January.
    5. Hasan, Zubair, 2002. "Mudaraba as a mode of finance in Islamic banking: theory, practice and problems," MPRA Paper 2951, University Library of Munich, Germany.
    6. Hasan, Zubair, 1991. "Comments on Mohsin S. Khan and Abbas Mirakhor, The Financial System and Monetary Policy in an Islamic Economy," MPRA Paper 3183, University Library of Munich, Germany.
    7. Hasan, Zubair, 1985. "Determination of Profit and Loss Sharing Ratios in Interest-Free Business Finance," MPRA Paper 3013, University Library of Munich, Germany.
    8. Zubair Hasan, 1991. "Mohsin S. Khan and Abbas Mirakhor: The Financial System and Monetary Policy in an Islamic Economy, Comment: محسن س. خان وعباس ميراخور: النظام المالي والسياسة النقدية في اقتصاد إسلامي ، تعليق: زبير حسن," Journal of King Abdulaziz University: Islamic Economics, King Abdulaziz University, Islamic Economics Institute., vol. 3(1), pages 83-91, January.
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    Cited by:

    1. Hasan, Zubair, 2012. "Incentive-compatible sukukmusharkah for private sector funding: Comment," MPRA Paper 41916, University Library of Munich, Germany.
    2. Abdullah Ibrahim Nazal & Fuad Al-Fasfus, 2018. "Impact of Liquidity Rules on Shareholders’ Returns in Jordan Islamic Bank," International Journal of Business and Management, Canadian Center of Science and Education, vol. 13(6), pages 225-225, April.

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