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Year 2016, Volume: 6 Issue: 4, 1407 - 1412, 01.09.2016

- Imronudin Javed Ghulam Hussain

Abstract

Why Do Bank Finance Clients Prefer Mark-up to Profit Loss Sharing Principles? Evidence from Islamic Rural Banks and Small to Medium Enterprises in Indonesia

Year 2016, Volume: 6 Issue: 4, 1407 - 1412, 01.09.2016

- Imronudin Javed Ghulam Hussain

Abstract

This study examines the preferences of Islamic rural banks clients in choosing Islamic financial contracts to finance their business. Mixed method, combining quantitative and qualitative approaches, was adopted in this study. Quantitative data was gathered from the Indonesian Financial Service Authority to examine the preferences of Small to Medium Enterprises (SMEs) in utilizing types of Islamic financial contracts. Qualitative data was collected by interviewing Islamic Rural Bank (BPRS) managers to investigate the reasons for choices of types of Islamic financing contracts. The finding shows that people prefer to use contracts under mark-up principles rather than Profit Loss Sharing (PLS) principles. Simplicity of the contracts was the main reason for choosing mark-up contracts. This trend affects the growth of mudaraba and musharaka contracts, and ultimately the growth of Islamic banks.

Keywords

Islamic Bank Small to Medium Enterprises Preferences Profit and Loss Sharing

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Details

Other ID JA49HJ93SD
Journal Section Research Article
Authors

- Imronudin This is me

Javed Ghulam Hussain This is me

Publication Date September 1, 2016
Published in Issue Year 2016 Volume: 6 Issue: 4

Cite

APA Imronudin, .-., & Hussain, J. G. (2016). Why Do Bank Finance Clients Prefer Mark-up to Profit Loss Sharing Principles? Evidence from Islamic Rural Banks and Small to Medium Enterprises in Indonesia. International Journal of Economics and Financial Issues, 6(4), 1407-1412.
AMA Imronudin, Hussain JG. Why Do Bank Finance Clients Prefer Mark-up to Profit Loss Sharing Principles? Evidence from Islamic Rural Banks and Small to Medium Enterprises in Indonesia. IJEFI. September 2016;6(4):1407-1412.
Chicago Imronudin, -, and Javed Ghulam Hussain. “Why Do Bank Finance Clients Prefer Mark-up to Profit Loss Sharing Principles? Evidence from Islamic Rural Banks and Small to Medium Enterprises in Indonesia”. International Journal of Economics and Financial Issues 6, no. 4 (September 2016): 1407-12.
EndNote Imronudin -, Hussain JG (September 1, 2016) Why Do Bank Finance Clients Prefer Mark-up to Profit Loss Sharing Principles? Evidence from Islamic Rural Banks and Small to Medium Enterprises in Indonesia. International Journal of Economics and Financial Issues 6 4 1407–1412.
IEEE .-. Imronudin and J. G. Hussain, “Why Do Bank Finance Clients Prefer Mark-up to Profit Loss Sharing Principles? Evidence from Islamic Rural Banks and Small to Medium Enterprises in Indonesia”, IJEFI, vol. 6, no. 4, pp. 1407–1412, 2016.
ISNAD Imronudin, - - Hussain, Javed Ghulam. “Why Do Bank Finance Clients Prefer Mark-up to Profit Loss Sharing Principles? Evidence from Islamic Rural Banks and Small to Medium Enterprises in Indonesia”. International Journal of Economics and Financial Issues 6/4 (September 2016), 1407-1412.
JAMA Imronudin -, Hussain JG. Why Do Bank Finance Clients Prefer Mark-up to Profit Loss Sharing Principles? Evidence from Islamic Rural Banks and Small to Medium Enterprises in Indonesia. IJEFI. 2016;6:1407–1412.
MLA Imronudin, - and Javed Ghulam Hussain. “Why Do Bank Finance Clients Prefer Mark-up to Profit Loss Sharing Principles? Evidence from Islamic Rural Banks and Small to Medium Enterprises in Indonesia”. International Journal of Economics and Financial Issues, vol. 6, no. 4, 2016, pp. 1407-12.
Vancouver Imronudin -, Hussain JG. Why Do Bank Finance Clients Prefer Mark-up to Profit Loss Sharing Principles? Evidence from Islamic Rural Banks and Small to Medium Enterprises in Indonesia. IJEFI. 2016;6(4):1407-12.