THE EFFECT OF PROFIT SHARING ON PERFORMANCE OF ISLAMIC BANK IN MUSLIM COUNTRIES

Masykuroh, Ely (2016) THE EFFECT OF PROFIT SHARING ON PERFORMANCE OF ISLAMIC BANK IN MUSLIM COUNTRIES. In: INTERNATIONAL CONFERENCE ON ECONOMICS, BUSINESS AND SOCIAL SCIENCES (ICEBUSS 2016), 6 - 7 Desember 2016, Malang.

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Abstract

The main principle of Islamic economics is the prohibition of riba (usury). Riba is understood as an advantage in borrowing money, so in practice the Islamic banking that every interest - even to the lowerst rate- is usury. Interest not only have to be set, but banned altogether. Prohibition of interest creates a need for interest-free banking system. Two main types of transactions are used in
Islamic banking are profit margins and profit sharing (hereinafter PLS) and the mark-up system.
Profit and Loss Sharing (PLS) as mudaraba or Musharaka, claimed as one of the caracteristics as trade mark of shari’ah banks in introducing the world.This study attempted to examine the effect is there a performance level of the PLS with the Finance Islamic banking both in terms of profitability, liquidity, credit risk and efficiency. This study tried to compare the PLS on in Muslim countries in the world, also to investigate the effect of PLS on Financial performance in Islamic bank in the Moslem Countries. The finding research there is no significant effect of PLS on the financial perfomrnace in that countries.

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