The Functioning and Accounting of Musharakah Financing in Participation Banks and Firms; Problems and Recommendations

Yusuf Dinc

MPRA Paper from University Library of Munich, Germany

Abstract: Main income source of participation banks is loans. Participation banks keep the loans they generate in their balance sheet and distribute the income generated by these loans into participation pools and into their equity. The loan processes of participation banks are unique and not evaluated enough for literature. Musharakah financing as a unique financing model of non-interest financial institutions is currently in the foreground. Describing the process of musharakah financing is important to understand the difference between conventional and participation banks. This research evaluates the process of musharakah financing of participation banks for the first time. Accounting of musharakah and the problems are also included in the research. Moreover, with this research, it is included in the results that there is no difference between accounting of normal loans and musharakah financing.

Keywords: Musharakah; accounting; Islamic banking; Islamic finance (search for similar items in EconPapers)
JEL-codes: G21 (search for similar items in EconPapers)
Date: 2017-02-10
New Economics Papers: this item is included in nep-acc and nep-isf
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Published in Balkan and Near Eastern Journal of Social Sciences 3.2(2017): pp. 159-168

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