The salam( not to mention asset-based or asset-backed

Thecredit risk is high under musharakah.

 The client order is not a sale contract but itis merely a promise to buy it.The validityis based on the fact that the bank must buy (become owner) and after thattransfer the ownership towards the buyer i.e.

We Will Write a Custom Essay Specifically
For You For Only $13.90/page!


order now

client Murabahahit is an approved form of deferred.Differenttypes of risks are being associated with this: Issueproblem risk:     We can perfectly design a Islamic banks tomerge the Mudaraba and Musharaka contracts,but it doesnot seem basically usefulwhen there are more functional , simple ways to use those depositors andcontracts are generally not prepared to risk principal. May be the debateshould be more about why the other forms of non murabaha debt financing likesalam and istisnaá and salam( not to mention asset-based or asset-backedfinancing using Ijrar) are not used more and Murabaha less.When itcomes for Islamic finance, the practical answer to the question is no. but in atheoretical it is a yes answer since the first model for an Islamic bank isdepending on a two-tier mudaraba, where the bank provides capital to business andshares in the profit and absorbs any losses.

The best system for bankingbecause when people deposits money into banks rather than investing asshareholders, they assume to use that money for transactions or for saving, andare not expecting to recognize losses of capital( or else they would find abetter goal, like a mutual fund , where they would fully get the profits frominvestments. Theconflict between whether to choose Mudaraba or Musharaka is still not decided.But based on certain questions we may decide to choose which one. Let supposewe are going to focus on a bank Mudaraba or muskaraka is large or small, takingequity position at all ( for instance, banks at united states are not allowedto make an equity investments so musharaka-based products are offered onlynon-bank financial institution.

 Mudarabah & Musharakah:

x

Hi!
I'm Mary!

Would you like to get a custom essay? How about receiving a customized one?

Check it out