Islamic finance in Europe (164)

Continuation

But this problem should not be exaggerated.

Islamic banks may, in practice, choose to deviate from traditional Shari’ah principles.

The aouthor notes that, by this way the Islamic banks will be able to mitigate this increased risk.

 (Obaidullah, 2005)

This occurs if they have to pay competitive market returns to investment account holders.

This occurs regardless of the actual bank performance.

Thus, under:

-      profit

-      and loss-sharing

would determine the payout.

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)