The role of Islamic banks in financing entrepreneurs with capital risk A Critical Study of the Banking Practice


April 2, 2019
The role of Islamic banks in financing entrepreneurs with capital risk A Critical Study of the Banking Practice
Adnan Oweida

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Issue

The research idea is based on verifying the performance of Islamic banks in practice and their contribution to the financing of entrepreneurs with risk capital subject to risk sharing principles. The new research focuses on revealing the extent to which Islamic banks contribute to participatory financing based on participatory principles in sharing the results of a project, either profit or loss. The study concluded that the importance of venture capital, where the future of the economy depends on this type of financing, where an Entrepreneur (Mudarib) is the most important element of economic factures, he is the one to whom the projected is attributed to and he is the one who finds a flaw in the market, then he transforms the flaw into project entailing products or services to add value to the economy. However, the classical financing system does not do justice to this rare element, where financing is rejected except the profitability is assured on the strength of collaterals, leaving him alone to face headwinds of the risks, while the financier is guaranteed of a fixed contractual return. That is the catastrophic situation of the classical financing system which discourages the financing of creative ideas and efficient projects if there is no guarantee (Creditworthiness) is made available by the applicant; Eventually, the scare resources are channeled to the less efficient enterprise

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