Implementing the Fundamental Principle of Islamic Finance PLS in Order to Reduce Moral Hazard on the Financial Services Market

Dariusz Piotrowski ()
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Dariusz Piotrowski: Nicolaus Copernicus University

Acta Universitatis Nicolai Copernici, Ekonomia, 2014, vol. 45, issue 1, 99-113

Abstract: Moral hazard is a situation where agent takes a risky actions, knowing that potential costs will be born by principal. In finance, moral hazard arises when advisers take risky decisions come to believe that they will not have to carry the full burden of potential loses. Implementing the fundamental principle of Islamic finance PLS could reduce moral hazard on financial services market.

Keywords: moral hazard; Islamic finance; financial advisory; profit and loss sharing (search for similar items in EconPapers)
JEL-codes: D82 Z12 (search for similar items in EconPapers)
Date: 2014
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