Institute of Islamic Banking (IIB)

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Browsing Institute of Islamic Banking (IIB) by Author "Haroon Siddique"

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    Risk manafement of murabaha: A practical approach
    (UNIVERSITY OF MANAGEMENT AND TECHNOLOGY, 2015) Haroon Siddique
    Purpose:The purpose of this research study is to understand and identify the risk involved in Murabaha while reviewing financing proposals, their execution and to propose relevant mitigating tools. Research Methodology / Approach:The research design is more of descriptive in nature. The selection of topic for research study is based on the researcher study in the field of Islamic finance. Further, the selection of topic is driven owing to personal interest in the topic. Findings:After identifying and analyzing the different stages of Murabaha transactions, it is found out that Murabaha transactions consist of various stages and in each of its stages, there are specific risk (Direct and Indirect Risk considerations) pertaining to each stage. Hence, it is inevitable for the professionals to get acquainted and understand the risk stages in Murabaha transactions. Research Limitation:The research has limitation of its applicability to the extent of Islamic banking institutions of Pakistanwith the exemption of applicability on commodity Murabaha transactions and transactions executed by Islamic Micro Finance institutions. Practical Implication:This study supports the risk analyst managers while reviewing the financing proposals before allowing disbursement so that they can approve and structure the facility with minimum risk. Moreover, this study will also be helpful for the finance managers of Islamic banks to execute the Murabaha transaction with mitigated structured in Shariah compliant manner. Originality:Considering the facts of wide utilization of Murabaha transactions at such a wide level, there is an enormous requirement of creation of document which helps the banking professional and students to get benefited. This research studyhas been conductedto understand and identify the risk involved in Islamic financing product of Murabaha while reviewing financing proposals execution and to propose relevant mitigating tools.