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Optimal profit sharing contract and principal-agent value in islamic bank

The principal-agent problems in the Islamic banking system, especially in profit sharing (mudarabah) contract are severe without effective dissemination of information between the contracting parties. In profit sharing (mudarabah) contract, the realized profit is influenced by information. In this s...

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Main Authors:	Sapuan N.M., Sanusi N.A., Ismail A.G., Wibowo A.
Other Authors:	49964398700
Format:	Article
Published:	American Scientific Publishers 2023
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id	my.uniten.dspace-22491
record_format	dspace
spelling	my.uniten.dspace-224912023-05-29T14:01:19Z Optimal profit sharing contract and principal-agent value in islamic bank Sapuan N.M. Sanusi N.A. Ismail A.G. Wibowo A. 49964398700 36523822900 36987804600 57190940136 The principal-agent problems in the Islamic banking system, especially in profit sharing (mudarabah) contract are severe without effective dissemination of information between the contracting parties. In profit sharing (mudarabah) contract, the realized profit is influenced by information. In this study, we provide suggestion in mitigating the principal-agent problem and increasing the returns of the contracting parties through the shuratic process (mutual consultation). Hence, the objective of this study is to empirically examine the optimal condition of profit sharing ratio (PSR) and shuratic process for profit sharing contract based on a simulation technique for Islamic banking in Malaysia. The results showed that the trend of shuratic process has a positive relationship with the trend of Islamic bank�s net profit. Additionally, the results also indicated that the Islamic bank�s net profit has a positive relationship to the Islamic bank�s profit sharing ratio (PSR) for profit sharing (mudarabah) financing and securities investment activities. On the other hand, there is a negative relationship between the Islamic bank�s PSR from return on financial and securities investment activities and the entrepreneur�s PSR. The results also revealed that there is a positive relationship between the PSR for investment saving accounts and the Islamic bank�s net profit. However, depositors will earn less return from their deposits. � 2015 American Scientific Publishers. All rights reserved. Final 2023-05-29T06:01:18Z 2023-05-29T06:01:18Z 2015 Article 10.1166/asl.2015.6132 2-s2.0-84946912437 https://www.scopus.com/inward/record.uri?eid=2-s2.0-84946912437&doi=10.1166%2fasl.2015.6132&partnerID=40&md5=0eb62bca842be3029633d5c815ae8c66 https://irepository.uniten.edu.my/handle/123456789/22491 21 6 1837 1841 American Scientific Publishers Scopus
institution	Universiti Tenaga Nasional
building	UNITEN Library
collection	Institutional Repository
continent	Asia
country	Malaysia
content_provider	Universiti Tenaga Nasional
content_source	UNITEN Institutional Repository
url_provider	http://dspace.uniten.edu.my/
description	The principal-agent problems in the Islamic banking system, especially in profit sharing (mudarabah) contract are severe without effective dissemination of information between the contracting parties. In profit sharing (mudarabah) contract, the realized profit is influenced by information. In this study, we provide suggestion in mitigating the principal-agent problem and increasing the returns of the contracting parties through the shuratic process (mutual consultation). Hence, the objective of this study is to empirically examine the optimal condition of profit sharing ratio (PSR) and shuratic process for profit sharing contract based on a simulation technique for Islamic banking in Malaysia. The results showed that the trend of shuratic process has a positive relationship with the trend of Islamic bank�s net profit. Additionally, the results also indicated that the Islamic bank�s net profit has a positive relationship to the Islamic bank�s profit sharing ratio (PSR) for profit sharing (mudarabah) financing and securities investment activities. On the other hand, there is a negative relationship between the Islamic bank�s PSR from return on financial and securities investment activities and the entrepreneur�s PSR. The results also revealed that there is a positive relationship between the PSR for investment saving accounts and the Islamic bank�s net profit. However, depositors will earn less return from their deposits. � 2015 American Scientific Publishers. All rights reserved.
author2	49964398700
author_facet	49964398700 Sapuan N.M. Sanusi N.A. Ismail A.G. Wibowo A.
format	Article
author	Sapuan N.M. Sanusi N.A. Ismail A.G. Wibowo A.
spellingShingle	Sapuan N.M. Sanusi N.A. Ismail A.G. Wibowo A. Optimal profit sharing contract and principal-agent value in islamic bank
author_sort	Sapuan N.M.
title	Optimal profit sharing contract and principal-agent value in islamic bank
title_short	Optimal profit sharing contract and principal-agent value in islamic bank
title_full	Optimal profit sharing contract and principal-agent value in islamic bank
title_fullStr	Optimal profit sharing contract and principal-agent value in islamic bank
title_full_unstemmed	Optimal profit sharing contract and principal-agent value in islamic bank
title_sort	optimal profit sharing contract and principal-agent value in islamic bank
publisher	American Scientific Publishers
publishDate	2023
_version_	1806426461704290304
score	13.211869

Optimal profit sharing contract and principal-agent value in islamic bank

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