المجلة الدولية لنشر البحوث والدراسات

International Journal of Research and Studies Publishing

المجلة الدولية لنشر البحوث والدراسات

Islamic banks (Profit Sharing Contracts and Agency Theory in the Islamic banks in Lebanon)


Dr. Racha Ghayad 1, Dr. Mohamad Hamdan 2

Assistant Professor, Head of Finance Department, Faculty of Economic Sciences and Business Administration, Lebanese University, Lebanon 1
Assistant Professor, Head of Marketing Department, Faculty of Economic Sciences and Business Administration, Lebanese University, Lebanon 2


Abstract:

The central feature characterizing the financial Islamic system is the absolute prohibition of the payment and receipt of fixed interest in any transaction. Theoretically, Islamic Banking operates on the basis of Profit Loss Sharing (Mudaraba and Musharaka). In Lebanon the balance sheet of Islamic banks appear that, the percentage of PLS financing is very weak. The lack of profit and loss sharing (PLS) financing is an important problem affecting Islamic banks in Lebanon. The main objective of this research is to analyze problems faced by Islamic banks in Lebanon to use the PLS contract. The type of PLS contract raises a set of issues concerning the contractual relations between the Islamic bank and the clients. These issues may be addressed from the perspectives of Agency Theory, as we will do in this paper.


Keywords:

Islamic Banking, Profit-and-Loss Sharing, Agency Theory, Mudaraba, Musharaka, Lebanon.

Assistant Professor, Head of Finance Department, Faculty of Economic Sciences and Business Administration, Lebanese University, Lebanon 1
Assistant Professor, Head of Marketing Department, Faculty of Economic Sciences and Business Administration, Lebanese University, Lebanon 2
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