The Benefits Of Mudarabah Interbank Investment

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In Mudarabah Interbank Investment (MII), the Shariah concept which is applicable is Mudarabah or also knows as Profit sharing. This refers to a form of partnership between the capital contributor or the rabb al-mal and the manager who contributes his or her managerial skills or also known as the mudarib. The profit from the partnership is shared between the rabb al-mal and mudarib following the mutually agreed profit sharing ratio while losses are is the responsibility solely of the capital provider, the rabb al-mal, on condition that the loss is not because of the manager’s carelessness or violation of specified conditions (Bank Islam Malaysia Berhad, "Interbank Investment Account (Mudarabah) (IIA Mudarabah)").

Profit of Mudarabah Interbank Investment is determined by …show more content…

As Mudharabah applies the concept of profit- sharing, the probability of attainment of profits or suffering of losses is resultant from economic activities. The maturity of Mudarabah Interbank Investment in the Islamic Interbank Money Market is possible to be an overnight basis, but yet Mudarabah Interbank Investment, within this short-term period can help contribute to the economic condition. The Islamic Interbank Money Market is destined for managing short-time period liquidity to support activities banks carry out, which is the usage of funds from the excess unit, to fund the shortage units, and to match or equalize the socioeconomic and financial needs between the two units. Mudarabah Interbank Investment, may actually indirectly contribute to economic growth as a part of the entire organization of the Islamic Financial Institutions needs Islamic Interbank Money Market to guarantee the continuousness of their businesses, and Mudarabah Interbank Investment is as a tool for this purpose. (Saiti, Hasan, & Adawiah, Islamic Capital Markets: Volatility, Performance and

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