Prior agreement on revising the profit sharing ratio during the tenure of the contract in Musharakah and Mudarabah of Islamic banks

Sadique, Muhammad Abdurrahman (2018) Prior agreement on revising the profit sharing ratio during the tenure of the contract in Musharakah and Mudarabah of Islamic banks. In: 17th Kuala Lumpur International Business, Economics and Law Conference 2018 (KLibel), 22nd-23rd December 2018, Putrajaya.

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Abstract

While it is generally ensured in equity based Islamic banking facilities that the profit sharing ratio is fixed at the inception of the contract, certain measures are seen to be adopted sometimes, that result in affecting the mechanism of profit sharing. These include reserving at the outset of the contract the option to alter the profit sharing ratio before the finalisation of the venture. The paper analyses a provision envisaging the possibility of adjusting the profit sharing ratio prior to liquidation of the partnership, with reference to accepted Islamic legal sources. It argues that such a provision does not seem appropriate in the prevalent environment of interest based banking, as it could become a means of defining the return of a partner, similar to interest based facilities. Introduction of such measures should be subject to careful assessment and revision by relevant bodies so as to avoid their harmful effects.

Item Type:	Conference or Workshop Item (Plenary Papers)
Additional Information:	5640/69043
Uncontrolled Keywords:	Profit, ratio, musharakah, mudarabah, revise
Subjects:	H Social Sciences > HB Economic Theory > HB126.4 Islamic Economics H Social Sciences > HF Commerce > HF5001 Business. Business Administration > HF5601 Accounting. Bookkeeping H Social Sciences > HG Finance > HG3368 Islamic Banking and Finance K Law > KBP Islamic Law > KBP1 Islamic law.Shariah.Fiqh > KBP490 Furūʻ al-fiqh. Substantive law. Branches of law. > KBP639 Muʻāmalāt
Kulliyyahs/Centres/Divisions/Institutes (Can select more than one option. Press CONTROL button):	Ahmad Ibrahim Kulliyyah of Laws Ahmad Ibrahim Kulliyyah of Laws > Department of Islamic Law
Depositing User:	Dr Muhammad Abdurrahman Sadique
Date Deposited:	16 Jan 2019 12:55
Last Modified:	31 Jan 2019 16:13
URI:	http://irep.iium.edu.my/id/eprint/69043

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