Islamic finance and COVID-19 recovery: the role Profit-Loss Sharing Contract
This note uncovers the beauty of Islamic finance via its Profit-Loss Sharing Contract (PLSC) as a financing tool in helping the economy and businesses to recover from COVID-19 economic crisis. PLSC is a contract that shares business risks between participants, while Interest-Based Contract (IBC)...
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| Main Authors: | , |
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| Format: | Article |
| Language: | en |
| Published: |
Penerbit Universiti Kebangsaan Malaysia
2020
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| Online Access: | http://journalarticle.ukm.my/16766/1/43171-139603-1-PB.pdf http://journalarticle.ukm.my/16766/ https://ejournal.ukm.my/pengurusan/issue/view/1328 |
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| Summary: | This note uncovers the beauty of Islamic finance via its Profit-Loss Sharing Contract (PLSC) as a financing tool in
helping the economy and businesses to recover from COVID-19 economic crisis. PLSC is a contract that shares
business risks between participants, while Interest-Based Contract (IBC) requires entrepreneurs to bear the entire
business risks. Besides its fairness and justice in wealth creation and income distribution, past literature have shown
that PLSC has been successfully adopted in various countries across industries. Redesign of mind-set and role from
self-interest to common interest and from intermediaries to entrepreneurs are needed for the financial sector to
embrace the benefits of PLSC towards achieving economic and societal sustainability. |
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