| Rationale | Anatomy
Practice | Conclusion
Islamic Financial Institutions | References
Abdallah, A., 1987.
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Abdeen, A.M. and
Shook, D.N., 1984.
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Aftab, M., 1986.
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Bruce, N.C., 1986.
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Zaidi, N.A., 1987.
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Banking and Finance, 4 (4): 3546.
Surah al-Rum (Chapter 30), verse 39; Surah al-Nisa (Chapter
39), verse l6l; Surah al-Imran (Chapter 3), verses l302; Surah
al-Baqarah (Chapter 2), verses 2758l. See Yusuf Ali's
Translation of the Qur'an.
Hadith compiled by Muslims (Kitab al-Musaqat).
This refers to a Hadith compiled by Muslims (Kitab al-Musaqat).
Bank Islam Malaysia Berhad has been offering a 70:30
profitsharing ratio in favour of depositors (Man 1988).
In 1984 the Islamic Bank of Bangladesh offered rates of return
ranging from 4.95 per cent to l4.l3 per cent. The Faisal
Islamic Bank of Egypt, Cairo, gave a 9 per cent rate of return
on deposits in the same year (Afkar Inquiry, December 1985).
According to Sharia, profits arising from a mudaraba
arrangement can be divided in any proportion between the two
contracting parties as agreed upon at the time of the
contract, but losses, if any, will fall on the financier only.
Some Muslim countries have recently introduced what are called
'Muqarada Bonds', the proceeds of which are to be used for
incomeyielding public utility projects such as the
construction of bridges and roads. The bond holders will have
a share in the collection of tolls and other receipts.
Qirad, sometimes also called muqarada, refers to
a financial arrangement whereby the financier gets a share in
the output, as in the case of Muqarada Bonds (see footnote 7).
In the literature, the terms qirad and mudaraba
are often used interchangeably.
The market shares of the Islamic banks are close to 20 per
cent in Egypt, Kuwait and Sudan and roughly l0 per cent in
Jordan and Qatar. By contrast, in Turkey, Islamic banks
account for less than 1 per cent of the market (see Nienhaus
of Mohamed Ariff, University