Islamic Finance and COVID-19 Recovery: The Role Profit-Loss Sharing Contract
Kewangan Islam dan Pemulihan COVID-19: Peranan Kontrak Perkongsian Untung Rugi

Faculty of Economics and Management
Universiti Kebangsaan Malaysia
43600 UKM Bangi, Selangor, MALAYSIA.
Institute of Islam Hadhari
Universiti Kebangsaan Malaysia
43600 UKM Bangi, Selangor, MALAYSIA.

eychah@ukm.edu.my

Faculty of Economics and Management
Universiti Kebangsaan Malaysia
43600 UKM Bangi, Selangor, MALAYSIA.
Institute for Strategic Research Farjam Ave
1684895411, Tehran, IRAN.

rgholami_458@yahoo.com

Abstract

This note uncovers the beauty of Islamic finance via its Profit-Loss Sharing Contract (PLSC) as a financing tool in helping the economy and businesses to recover from COVID-19 economic crisis. PLSC is a contract that shares business risks between participants, while Interest-Based Contract (IBC) requires entrepreneurs to bear the entire business risks. Besides its fairness and justice in wealth creation and income distribution, past literature have shown that PLSC has been successfully adopted in various countries across industries. Redesign of mind-set and role from self-interest to common interest and from intermediaries to entrepreneurs are needed for the financial sector to embrace the benefits of PLSC towards achieving economic and societal sustainability.

Keywords

COVID-19 pandemic; Islamic finance; Profit-loss sharing; sharing risk
https://doi.org/10.17576/pengurusan-2020-59-02

Citation

Abdul-Rahman, A. A., & Gholami, R. (2020). Islamic Finance and COVID-19 Recovery: The Role Profit-Loss Sharing Contract. Jurnal Pengurusan, 59, 7–10. https://doi.org/10.17576/pengurusan-2020-59-02

@article{abdulrahman2020islamic,
  title={Islamic Finance and COVID-19 Recovery: The Role Profit-Loss Sharing Contract},
  author={Abdul-Rahman, Aisyah and Gholami, Reza},
  journal={Jurnal Pengurusan},
 

volume={59},
  number={},
  pages={7—10},
  year={2020},
  doi={https://doi.org/10.17576/pengurusan-2020-59-02},
  publisher={Penerbit UKM},
}

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59 (2020) 7 – 10

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