Failure and potential of profit-loss sharing contracts: a perspective of New Institutional, Economic (NIE) theory

• Main Authors: Aisyah Abdul-Rahman, Radziah Abdul Latif, Ruhaini Muda, Mohamad Azmi Abdullah
• Format: Article
• Language: English; English
• Published: Elsevier 2014
• Subjects: HB1-3840 Economic theory. Demography
• Online Access: https://eprints.ums.edu.my/id/eprint/30931/1/Failure%20and%20potential%20of%20profit-loss%20sharing%20contracts_%20A%20perspective%20of%20New%20Institutional%2C%20Economic%20%28NIE%29%20Theory_ABSTRACT.pdf; https://eprints.ums.edu.my/id/eprint/30931/2/Failure%20and%20potential%20of%20profit-loss%20sharing%20contracts_%20a%20perspective%20of%20New%20Institutional%2C%20Economic%20%28NIE%29%20theory.pdf; https://eprints.ums.edu.my/id/eprint/30931/; https://www.sciencedirect.com/science/article/pii/S0927538X1400016X; http://dx.doi.org/10.1016/j.pacfin.2014.01.004

This paper theoretically evaluates why profit–loss sharing (PLS) contracts in Islamic banking fails and its potential for improvement within the scope of the New Institutional Economic Theory (NIE). The objective of the evaluation is to draw conclusive theoretical arguments of whether Islamic bankin...