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Title: Profit/loss sharing and risk in the Islamic banking system with a special reference to Malaysia
Author: Zainol, Z.
Awarding Body: University of Edinburgh
Current Institution: University of Edinburgh
Date of Award: 2007
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Although the concept of profit/loss sharing is generally considered the most appropriate form of Islamic contract, its application to the Islamic banking system has provoked some criticism. Islamic banks need to make a profit if they are to compete with conventional banks, which focus exclusively on profit maximization. The profit generated by Islamic banks would allow them to offer higher remuneration to their shareholders and depositors and to invest in product innovation and technology. This study explores various aspects of Islamic banking, especially its basis of the Shari’a. Te discussion includes a look at the history of banking, the development of financial intermediaries and the importance of Islamic banks in this role to cater for the needs of Muslims, and the basic principles of Islamic economics. To understand why Islamic banks do not operate fully according to the principles of profit/loss sharing, particularly in Malaysia, it is necessary to analyse the reasons for this situation. The main challenge to Islamic banking in modern society is risk. Unlike conventional banks, Islamic banks are constrained by the Shari’a prohibition of riba on investments and financing, so risk management is top priority. This thesis examines risk in detail: how its concept is viewed by scholars and financial organizations around the world and its management in practice with special reference to the financial systems in Malaysia, using Bank Islam (M) Berhad, its first Islamic bank, as a case study. Uing historical and modern evidence, the thesis analyses the possible means of managing risk in Islamic banking so that the Islamic banks comply with the Shari’a, yet to be fully competitive with their conventional counterparts.
Supervisor: Not available Sponsor: Not available
Qualification Name: Thesis (Ph.D.) Qualification Level: Doctoral
EThOS ID:  DOI: Not available