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FINANCIAL RISK MANAGEMENT IN SYARIAH CONTRACTS
Hanafi, Syafiq M.
Hanafi, Syafiq M.
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Abstract
This writing attempts to elaborate the latest views on financial risk in banking products. Theoretically, the musyârakah, mudhârabah and murâbahah systems are the most ideal concept of profit loss sharing business. Musyârakah and mudhârabah are business contracts recognized since the beginning of Islamic history. In Musyârakah contract, each contracting parties is considered equal in their rights in doing business contract. At the practical level, the writer concludes that musyârakah and mudhârabah constitute minor portion than murâbahah in the overall Syari’ah banking transactions. These products of Syari’ah banking tend to lead to moral hazard and adverse selection and thus agency theory and asymmetrical information explain the inherent problem well. In addition, the concept of profit-loss sharing according to the writer is still controversial which is also vulnerable to moral hazard.
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2013
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With permission of the license/copyright holder