Profit sharing ratio determination of Mudharabah contract in Indonesia islamic banks

Kumara Adji Kusuma, Nyong Eka Teguh Iman Santosa, Djoko Mursinto, Muhamad Nafik Hadi Ryandono

Research output: Contribution to journalArticlepeer-review

3 Citations (Scopus)

Abstract

The most idiosyncratic difference between Islamic and conventional banks is on the system applies that Islam reject the use of interest as its method for product pricing. Islamic bank offers the Islamic paradigm which is profit sharing represented in the mudharabah contract. Mudharabah uses profit sharing ratio in its pricing. This research try to reveal the method used by the Islamic banks in Indonesia in determining the ratio. Using qualitative approach, this study interviews the Islamic financial institution ie the Islamic banks owns by the government, Indonesia Islamic Council, and Islamic finance and banking experts. The finding is that the method used by all of the Islamic banks are the benchmarking model while some banks are not. This finding will benefit the Islamic financial Industry in determining the best practice of Islamic pricing in mudharabah contract.

Original languageEnglish
Pages (from-to)2804-2813
Number of pages10
JournalOpcion
Volume34
Issue number85
Publication statusPublished - 2018
Externally publishedYes

Keywords

  • Bank
  • Indonesia
  • Islam
  • Model
  • Mudharabah
  • Profit
  • Ratio

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