Comparative Analysis of Murabahah and Mudharabah Financing Risk from Islamic Microfinance Institutions Perspective

Alam, Azhar; Sukmana, Raditya; Fianto, Bayu Arie; Izzuddin, Azzam

doi:10.29244/jam.10.1.79-92

Cited by 4 publications

(6 citation statements)

References 14 publications

(15 reference statements)

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“…In dealing with these problems, BMTs can offer innovative lending mechanisms, such as group lending, joint liability, monitoring, and individual collateralized loans ("guaranteed" payments with promise: access to larger loans in the future depends on current financing payments) . In another study, Alam et al (2022) compared the risks of murabahah and mudharabah financing in BMT. The findings from the study indicate that the risk of mudharabah financing is greater than that of murabaha financing.…”

Section: Discussionmentioning

confidence: 99%

Asymmetric information issues in micro-business financing of Baitul Maal wa Tamwil

Martiana,

Kassim,

Zakariyah

2024

J. Eko. Keu. Isl.

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Purpose – Despite its potential advantages, poverty interferes with economic progress in developing countries, obstructing small and medium-sized businesses from obtaining external financial assistance via Islamic microfinance. This study explores the problems related to asymmetric information in the context of funding microbusinesses in Baitul Maal wa Tamwil (BMT), with the goal of improving our understanding of the risks associated with financing in Islamic microfinance institutions, namely BMTs.Methodology – This research utilized a qualitative approach and content analysis to study BMTs in Indonesia, involving academics, practitioners, and voluntary participants. The sample size was adequate for achieving data saturation.Finding – This study demonstrates that there might be asymmetric information during the execution of contracts, leading to deviant behavior by BMT management and partners. The study additionally identified the risk characteristics present in Islamic MFIs, emphasizing the necessity for implementing novel lending mechanisms, such as group lending and individual collateralized loans. Implication – This study underscores the importance of resolving the substantial administrative overheads associated with these institutions. It is advisable to utilize additional research methods such as interviews, observations, and documentation to augment the depth of the research and engage a varied array of individuals for a comprehensive collection of information.Originality – Studies of Islamic microfinance in Indonesia have examined its performance, obstacles, and experience. However, empirical data on agency problems such as moral hazard and asymmetric knowledge are lacking. For optimal BMT operating efficiency and Shariah compliance, it is essential to comprehend these challenges.

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Section: Discussionmentioning

confidence: 99%

Asymmetric information issues in micro-business financing of Baitul Maal wa Tamwil

Martiana,

Kassim,

Zakariyah

2024

J. Eko. Keu. Isl.

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“…The next risk is character risk which is influenced by customer negligence, violation of provisions and unprofessional company internal management. Alam et al, (2022) risk of mudharabah financing is greater than the risk of Murabahah financing. In practice, mudharabah financing tends to be relatively high due to asymmetric information and moral hazard.…”

Section: Financing Risk Based On the Contractmentioning

confidence: 93%

Financing Risk in Islamic Banking Before and During the Covid-19 Pandemic

Mardhiyaturrositaningsih

2022

JESKaPe

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This study aims to identify the risk of financing in Islamic Banks. Financing risk assessment is divided into two categories, financing based on contract and financing based on usage. This study uses a comparative analysis method to identify differences in financing risks in the period before and during the Covid-19 pandemic. The results of the study show that there are six differences in financing risks based on the contract period before and during the Covid-19 pandemic. The risk of financing based on use shows that there is no difference in the risk of financing investment for MSMEs before and during the Covid-19 pandemic. Meanwhile, the difference can be seen in the risk of working capital financing for MSMEs, working capital financing for Non-MSMEs, the risk of investment financing for Non-MSMEs and the risk of consumptive financing. These results indicate that Islamic bank financing is responding to the Covid-19 pandemic with changes in financing risk. Banks need to manage financing with the aim of increasing financing not increasing risk.

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“…Mudharabah financing helps increase profits. Alam et al (2022) stated that the risk of mudharabah financing is greater than that of Murabahah financing. In practice, mudharabah financing tends to be relatively high due to asymmetric information and moral hazard.…”

Section: Financing Based On the Types Of Shari'ah Compliant Contractmentioning

confidence: 99%

“…Murabahah financing has a positive impact on the profitability of the Bank (Agustina et al, 2022). Alam et al, (2022) stated that the risk of mudharabah financing is greater than that of Murabahah financing. The Murabahah financing scheme is able to reduce the level of financing risk.…”

Section: Financing Based On the Types Of Shari'ah Compliant Contractmentioning

confidence: 99%

“…Yusuf et al, (2019) show that differences in the use of types of shari'ah compliant contract in Islamic banking affect the ability of banks to generate profits. Alam et al (2022) stated that the risk of mudharabah financing is greater than that of Murabahah financing. Susanti (2020) stated that there was a decrease in mudharabah financing compared to the period before the Covid-19 pandemic.…”

Section: Introductionmentioning

confidence: 99%

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The Financing Structure of Islamic Banks: A Comparative Study

Mardhiyaturrositaningsih

2022

AL-ARBAH

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Purpose - This study aims to analyse the financing structure of Islamic Commercial Bank and Islamic Business Unit. This Study Compare the financing structure before and during the Covid-19 pandemic.Method - This research is using The comparative research method to determine differences in the financing structure of Islamic Banks before and during the Covid-19 period.Result - The result of this research indicates that the financing structure of Islamic Commercial Banks and Islamic Business Units based on the type of shari’ah compliant contract and the type of usage shows differences before and during the covid-19 pandemic. The decrease is shown in financing with mudharabah and ijarah contracts.Implication - The research indicates that the Bank has been impacted by the Covid-19 pandemic as indicated by changes in the financing structure of the banking system. Banks need to determine the right strategy in this situation.Originality- This study conducted a financing test based on the type of contract and the type of usage. This study identified two conditions in the period before and during the pandemic.

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Comparative Analysis of Murabahah and Mudharabah Financing Risk from Islamic Microfinance Institutions Perspective

Cited by 4 publications

References 14 publications

Asymmetric information issues in micro-business financing of Baitul Maal wa Tamwil

Asymmetric information issues in micro-business financing of Baitul Maal wa Tamwil

Financing Risk in Islamic Banking Before and During the Covid-19 Pandemic

The Financing Structure of Islamic Banks: A Comparative Study

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