Islamic Banking and Finance: New Perspectives on Profit Sharing and Risk

1. Introduction
2. Decision-making under uncertainty: an Islamic perspective
3. Incentive-compatible profit-sharing contracts: a theoretical treatment
4. Evidence on agency-contractual problems in mu∂arabah financing operations by Islamic banks
5. Incentive-compatible constraints for Islamic banking: some lessons from Bank Muamalat
6. How informal risk capital investors manage asymmetric information in profit/loss-sharing contracts
7. Choice between debt and equity contracts and asymmetrical information: some empirical evidence
8. Islamic banking contracts as enforced in Iran
9. Islamic financial institutions of India: their nature, problems and prospects
10. The interface between Islamic and conventional banking
11. Alternative visions of international monetary reform

Over 200 Islamic banks - including some of the largest multinational banks - now operate in non-Muslim as well as Muslim countries. This work discusses Islamic financial theory and practice, and focuses on the opportunities offered by Islamic finance as an alternative method of financial intermediation. Key features of profit-sharing (as opposed to debt-based) contracts are highlighted, and the ways in which they can facilitate improved efficiency and stability of a financial system are explored