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Implementing the Fundamental Principle of Islamic Finance PLS in Order to Reduce Moral Hazard on the Financial Services Market

Author

Listed:
  • Dariusz Piotrowski

    (Nicolaus Copernicus University)

Abstract

Moral hazard is a situation where agent takes a risky actions, knowing that potential costs will be born by principal. In finance, moral hazard arises when advisers take risky decisions come to believe that they will not have to carry the full burden of potential loses. Implementing the fundamental principle of Islamic finance PLS could reduce moral hazard on financial services market.

Suggested Citation

  • Dariusz Piotrowski, 2014. "Implementing the Fundamental Principle of Islamic Finance PLS in Order to Reduce Moral Hazard on the Financial Services Market," Acta Universitatis Nicolai Copernici, Ekonomia, Uniwersytet Mikolaja Kopernika, vol. 45(1), pages 99-113.
    • Handle: RePEc:cpn:umkanc:2014:p:99-113
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    More about this item

    Keywords

    moral hazard; Islamic finance; financial advisory; profit and loss sharing;
    All these keywords.

    JEL classification:

    • D82 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Asymmetric and Private Information; Mechanism Design
    • Z12 - Other Special Topics - - Cultural Economics - - - Religion

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