Islamic finance in Europe (35)

Continuation

The author writes that:

The concept of profit involves the idea of sharing the risks of both:

-      gains;

-      and losses.

It symbolizes:

-      entrepreneurship;

-      and wealth creation.

Although this is the foundation of the:

-      profit-sharing;

-      and loss-sharing

system on which Islamic banks should ideally be based.

In practice, this kind of contract plays only a secondary role.

This risk-sharing principle is implemented through a series of contractual arrangements which are analysed in Section 1.4.

From the research paper of European Central Bank

(Authors: F.Mauro, P.Caristi, S.Couderc, A.D.Maria, L.Ho, B.K.Grewal, S.Masciantonio, S. Ongena and S.Zaher)