Impact of inflation on mudarabah profits : some observations
Author
Source
Journal of King Abdulaziz University : Islamic Economics
Issue
Vol. 17, Issue 2 (31 Dec. 2004), pp.21-25, 5 p.
Publisher
King Abdulaziz University Scientific Publishing Center
Publication Date
2004-12-31
Country of Publication
Saudi Arabia
No. of Pages
5
Main Subjects
Financial and Accounting Sciences
Religion
Islamic Studies
Topics
- Banks
- Islamic jurisprudence
- Islamic economics
- Islam
- Inflation(Finance)
- Financing
- Profits
- Speculation
- Accountants
- Religious aspects
- Banking
- Islamic Banks
Abstract EN
The depreciation of currency and its use as unit of account jeopardises the ability of mudarabah (profit sharing) to do justice to the rabb-al-mal (capital owner) and it results in transfer of most of the gains (real) and in some cases even part of the capital to the mudarib (entrepreneur).
In addition to moral hazards, it is an important cause of non prevalence of profit sharing mode of finance.
It adversely affects musharakah and it has reduced the availability of qard hasan to almost nil.
The viability of these modes of finance is vital for ensuring the full utilisation of Islamic finance.
If mudarabah contract is modified so that it provides for sharing of real profit in agreed proportions (instead of nominal profits), inflation would not affect profit sharing and both mudarib (entrepreneur) and rabb-al-mal share real profit in agreed proportion.
American Psychological Association (APA)
Rab, Hifzur. 2004. Impact of inflation on mudarabah profits : some observations. Journal of King Abdulaziz University : Islamic Economics،Vol. 17, no. 2, pp.21-25.
https://search.emarefa.net/detail/BIM-361519
Modern Language Association (MLA)
Rab, Hifzur. Impact of inflation on mudarabah profits : some observations. Journal of King Abdulaziz University : Islamic Economics Vol. 17, no. 2 (2004), pp.21-25.
https://search.emarefa.net/detail/BIM-361519
American Medical Association (AMA)
Rab, Hifzur. Impact of inflation on mudarabah profits : some observations. Journal of King Abdulaziz University : Islamic Economics. 2004. Vol. 17, no. 2, pp.21-25.
https://search.emarefa.net/detail/BIM-361519
Data Type
Journal Articles
Language
English
Notes
Includes bibliographical references : p. 25
Record ID
BIM-361519