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Reputation Risk and its Impact on the Islamic Banks: Case of the Murabaha

Author

Listed:
  • Mohamad Sabri Haron

    (Department of Pusat Citra University, Department of Institute of Malaysia and International Studies (IKMAS), Universiti Kebangsaan Malaysia, Bangi, Selangor, Malaysia,)

  • Rashila Ramli

    (Department of IKMAS, Director of Institute of Malaysia and International Studies (IKMAS), Universiti Kebangsaan Malaysia, Bangi, Selangor, Malaysia,)

  • Malek Marwan Yousef Injas

    (Department of Economic Development, PHD student at Institute of Malaysia and International Studies (IKMAS), Universiti Kebangsaan Malaysia, Bangi, Selangor, Malaysia,)

  • Raghad Azzam Injas

    (Department of Economic Development, Master student at Institute of Malaysia and International Studies (IKMAS), Universiti Kebangsaan Malaysia, Bangi, Selangor, Malaysia.)

Abstract

Murabaha to the purchase orderer (MPO) is a rival product in the Islamic banking (IBs) system. It is implemented in the most of IBs. However, there is a controversy among contemporary jurists (Shari'ah Supervisory Board [SSBs]) in the mechanism of the implementation of this product. The objective of this study is to show the controversial issues related to the product of Murabaha and to identify its impact on the bank's reputation. This study is an exploratory study therefore, based on the literature review relating to the issues of MPO, reputation risk, and non-compliance risk. This study tries to describe and reveal the relationship between reputation and non-compliance risk. As well as revealing the impact of reputation risk on the IB stability and financial performance. It aims to brought the attention of decision-makers regarding consequences of these risks. At the end of this paper, concluded that the IBs like all other corporations, affected by the risks reputation, despite their principles that based on Islamic precepts.

Suggested Citation

  • Mohamad Sabri Haron & Rashila Ramli & Malek Marwan Yousef Injas & Raghad Azzam Injas, 2015. "Reputation Risk and its Impact on the Islamic Banks: Case of the Murabaha," International Journal of Economics and Financial Issues, Econjournals, vol. 5(4), pages 854-859.
    • Handle: RePEc:eco:journ1:2015-04-02
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    1. repec:bcp:journl:v:7:y:2023:i:7:p:906-918 is not listed on IDEAS
    2. Maria Bhatti & Muhammad Shujaat Saleem & Fadillah Mansor, 2025. "Need for reform in AAOIFI standards on murabaha financing: evidence from Islamic Banks in Pakistan," Quality & Quantity: International Journal of Methodology, Springer, vol. 59(1), pages 59-78, February.

    More about this item

    Keywords

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    JEL classification:

    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages
    • G32 - Financial Economics - - Corporate Finance and Governance - - - Financing Policy; Financial Risk and Risk Management; Capital and Ownership Structure; Value of Firms; Goodwill
    • G33 - Financial Economics - - Corporate Finance and Governance - - - Bankruptcy; Liquidation

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