Hindrance of Mudharabah Financing: A Study from Islamic Banking Industry of Pakistan

  • Tuqir Afzal Department of Leadership and Management Studies, Faculty of Contemporary Studies, National Defence University, Islamabad, Pakistan
  • Shazia Hassan Assistant Professor, Department of Leadership and Management Studies, Faculty of Contemporary Studies, National Defence University, Islamabad, Pakistan
Keywords: Islamic Banking, Mudarabah Growth, Operational Difficulties, Customers Preferences, Risk Factors

Abstract

In spite of the momentous growth of Islamic banking, the equity-based financing, "Mudarabah"(trustee partnership), the most pioneer product of Islamic banking, is still in its infancy. It is evident from the literature that the implementation of Mudharabah based financing is very less compared to other modes of financing. Therefore, this study is conducted to investigate the hindrance factors of Mudarabah financing. After the literature review, qualitative research methods applied to study the effect of Moral Hazard, Operational Difficulties andRisk factors. The findings showed the inverse relation between Mudarabah growth and operational difficulties, signifying that as operational difficulties increased managers discouraging customers not to adopt Mudarabah financing as their first choice. Risk Factors and morals hazards also show the inverse relationship. Findings of the study have practical implications for financial institutions, practitioners, policy makers, and customers. 

 

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Published
2018-11-10
How to Cite
Afzal, T., & Hassan, S. (2018). Hindrance of Mudharabah Financing: A Study from Islamic Banking Industry of Pakistan. International Journal of Islamic Banking and Finance Research, 2(2), 16-23. Retrieved from https://www.cribfb.com/journal/index.php/ijibfr/article/view/194
Section
Articles