Mudarabah Financial Sharing ( MFS )

Bidabad, Bijan

doi:10.12816/0025697

Cited by 11 publications

(9 citation statements)

References 3 publications

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“…Although Islamic banks' over-concentration on murabaha is seriously criticized on various grounds (Choudhury, 2007;Choudhury and Hussain, 2005;Kuran, 1996;Khan, 2010;El-Gamal, 2006;Suzuki et al, 2019), such a financing pattern may have provided Islamic banks an extended protection from uncertainties evolving from COVID-19; because the probability of loss from PLS contract (particularly from murabaha) is presumed to be higher than the fixed rate of investment. The reason is that the standard norms of PLS contracts (Mudaraba, for example) state that rab-ul-maal (Islamic banks as fund provider) should absorb the loss of partner's (mudarib or entrepreneur/investor) projects (Bidabad, 2014;Farooq, 2007;Presley and Sessions, 1994;Suzuki and Miah, 2018).…”

Section: Probable Impact On Islamic Banksmentioning

confidence: 99%

The impact of COVID-19 on Islamic banks in Bangladesh: a perspective of Marxian “circuit of merchant’s capital”

Miah

Suzuki

Uddin

2021

JIABR

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Purpose This paper aims to assess the probable impact of COVID-19 on the Islamic banking system in Bangladesh. More specifically, it attempts to test the hypothesis that Islamic banks are exposed to increased risk because of their role as a provider of “merchant capital” including financing for trade, commerce and working capital, which are believed to be severely disrupted by the COVID-19. Design/methodology/approach The paper draws upon the Marxian tradition on the identification of the circuit of “merchant capital” separated from the circuit of “interest-bearing capital.” Moreover, the research adopts the balance sheet approach to trace the sectoral distribution of investment as well as sources of income of Islamic banks. Findings The research supports the hypothesis that the investment pattern of Islamic banks is skewed toward the trade and merchant’s financing. More than two-third of Islamic banks’ investment, and income thereof, is concentrated on working capital and trade finance. As these sectors are largely vulnerable to the economic shock resulting from COVID-19, Islamic banks in Bangladesh are likely to be affected through this channel. Research limitations/implications The research focuses only on Islamic banks in Bangladesh. Further study can assess the impact of COVID-19 on conventional and Islamic banks in other countries to find similarities and differences with the findings of the current research. Practical implications The finding of this research will be useful for bank managers, policymakers and users of financial services. In particular, this study provides important information useful for regulators in devising appropriate policies which aim to mitigate the adverse impact of COVID-19. Originality/value To the best of the authors’ knowledge, this is the first study that attempts to examine the impact of COVID-19 on Islamic banking system in Bangladesh, a country where Islamic banks occupy one-third of the total banking system’s assets.

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Section: Probable Impact On Islamic Banksmentioning

confidence: 99%

The impact of COVID-19 on Islamic banks in Bangladesh: a perspective of Marxian “circuit of merchant’s capital”

Miah

Suzuki

Uddin

2021

JIABR

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“…Mudarabah is a contract between two parties in which one party brings capital and the other provides the labor and skill for investing in a project. The earnings are shared between the two parties as indicated by the contract (Bidabad, 2014). In Islamic banking, the capital is provided by the bank and the labor/skill is provided by the customer (Amelia & Hardini, 2017).…”

Section: Literature Reviewmentioning

confidence: 99%

The Interest in Islamic Finance Contracts in Saudi Arabia as Viewed by Google Trends

Aldarabseh¹

2019

IJEF

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Several Islamic contracts have been used by Islamic banks to cover the financial needs of their customers. The contracts include Murabahah, Ijarah, Tawarruq, Mudarabah, Musharakah, Salam, and Istisna'. In the current study, the interest in Islamic financial contracts in the past 5 years (2014)(2015)(2016)(2017)(2018)(2019) in Saudi Arabia as viewed by Google trends was examined. The interest in Murabahah showed increases with the years, whereas decreases in the interest of Tawarruq, Salam Mudarabah were observed in the last years. However, the interest in Ijarah and Istisna' was stable during the examined period. With respect to Musharakah, the interest decreased with years until 2017 then it showed slight increases in 2018 and 2019. Differences in the interest of financial contracts were also observed across different regions of Saudi Arabia. The interest in Ijarah, Tawarruq and Istisna" was higher in Riyadh, whereas the interest in Murabahah and Musharakah was higher in Ha"il than other Saudi regions The present findings can be used by Islamic banks to shape their financing services according to observed interest trends and across different regions of Saudi Arabia.

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“…Financial sharing institutions, funds and banks necessitate that their capital and number of shareholders be instantaneously variable. Joint Stock Company with Variable Capital (JSCVC) (Bidabad, 2014a, 2014b, 2014c, 2014d) is a joint stock company in which the capital and shares vary by new entrance or withdrawals of stockholders or by lapse of time through changing sharing proportions because of changes in shares' durations. The amount of nominal capital of the company at any point of time is calculated by summing up the nominal values of the shares of shareholders at that time, but company's yields are distributed by time-duration weighted of the shares.…”

Section: Accounting For Funds With Variable Capitalmentioning

confidence: 99%

“…3. Rastin Banking : is a true operational Islamic banking.Bidabad (2014c). New Operational Islamic Banking System, Volume One, Theoretical Foundations, LAP Lambert Academic Publishing, OmniScriptum GmbH & Co. KG, ISBN: 978-3-659-54463-7.Bidabad (2014d) New Operational Islamic Banking System, Volume Two, Applicational Issues, LAP Lambert Academic Publishing, OmniScriptum GmbH & Co. KG, ISBN: 978-3-659-55210-6.…”

Section: Notesmentioning

confidence: 99%

Rastin partnership accounting part I: general procedure

Bidabad

Allahyarifard

Sherafati

2019

JIABR

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Purpose This paper aims to explain a new system of accounting for partnership financing that applies in Rastin profit and loss sharing banking. In this system, the interest rate is not used in calculations and accounting, and instead, the “time value” of capital based on the amount and duration of the partnership is used. Design/methodology/approach Rastin Partnership Accounting principles have been founded on off-balance-sheet items and on the basis of the institutions’ obligations to the depositors and receivers of financial resources, and they are in compliance with the nature of the financial intermediary activity (a partnership of depositor in the yields of the fund receiver via the bank). Findings The distribution of profit among stakeholders (including workforce and capital owners) is accomplished according to the share of each beneficiary in the created value added. In this regard, Euler’s theorem, as the best mathematical-economic innovation for distribution of income is applied. Research limitations/implications This system is novel, and it is required to be more elaborated for further practical development and adjustment. Practical implications In this accounting system, the return of the partnership is distributed among sharers based on the amount and duration of their partnership. The penalty for delay in payment is calculated from the amount of the incurred loss due to negligence or blameworthy of the undertaker and not upon a penalty interest rate. Social implications Interest rate as an essential factor in conventional accounting is not usable in Islamic banking and other similar institutions that work based on partnership, such as mutual funds and saving and loan associations. The proposed system removes this shortage and is fairer than the conventional accounting. Originality/value Approach of this accounting system is fully different from the conventional accounting because of intrinsic characteristics of the intermediary role of financial partnership institutions and Islamic banks.

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Mudarabah Financial Sharing ( MFS )

Cited by 11 publications

References 3 publications

The impact of COVID-19 on Islamic banks in Bangladesh: a perspective of Marxian “circuit of merchant’s capital”

The impact of COVID-19 on Islamic banks in Bangladesh: a perspective of Marxian “circuit of merchant’s capital”

The Interest in Islamic Finance Contracts in Saudi Arabia as Viewed by Google Trends

Rastin partnership accounting part I: general procedure

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