Musyarakah contract is a joint venture contract between two or more parties where the profit is shared according to the agreed profit sharing ratio. The new musyarakah model internalizes this concept and takes into account the investment of two parties using two different rates of profit as well as two profit sharing rates. At present, this model is the only model that uses two profit sharing rates to ensure justice in a joint venture investment. This concept can be extended in other Islamic investment or banking products that will attract more foreign investors who are keen in musyarakah products. Apart from this, it may initiate other researches to develop new products in Islamic banking/financing and investment.
The existence of Islamic banks that grow rapidly in every corner of the world has caused strong competition among them and other conventional banks in Malaysia. This requires the banks management to choose wisely on the determinants that make them to remain strong and relevant in the Islamic banking sector. The main purpose of this study is to determine internal and external significant determinants for Islamic banks in Malaysia using Principal Component Analysis (PCA). The Kaiser-Meyer-Olkin (KMO) was applied in this study to measure the data sampling is acceptable and adequate. While, and Bartlett's Test is used to validate the internal and external component. The significant banking determinants selected for the study include deposit ratio, operating efficiency and market concentration. The result shows that the internal and external significant determinants are Bank Size and Gross Domestic Product. The study utilized secondary data from year 2010 until year 2016 for 13 Islamic banks in Malaysia.
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