Profit distribution in the Islamic banks-daily product basis and allocation of weightages

Abstract EN

Within the past three decades, the Islamic banking industry has gained cumulative growth momentum given the grow- ing demand for Shar¯ı‘ah-compliant financial instruments.

Islamic banking has now achieved greater recognition as a viable alternative to the conventional banking; as depicted by various convincing data including the increasing growth of its deposits globally.

The majority of Islamic banks have also benefitted from the profit distribution mechanism that has considerably improved over time.

However, amidst this positive growth, there has been growing criticisms on numerous areas of Islamic banking.

This scenario includes an important issue on the usage of daily product basis and allocation of weightages for profit distribution in the Islamic banks.

This study, therefore, aims to examine its compatibility with the principles of Shar¯ı‘ah and to weigh the objections in the criticisms against these principles.