Social learning and principal-agent problems in profit sharing contract
What is it about?
The objectives of this study are twofold. First, to theoretically examine the profit sharing (mudarabah) contract that produces an optimal distribution of return in the presence of social learning (shuratic process) within the environment of asymmetric information. Second, to empirically investigate the optimal condition of profit sharing ratio (PSR) and social learning for profit sharing (mudarabah) contract in Islamic banking.
Why is it important?
The empirical results discovered that Islamic bank had utilized social learning in their daily activities especially in the asset side. The results also showed the trend of social learning has a positive relationship with the trend of Islamic bank’s net profit. Additionally, the results also indicated that the Islamic bank’s net profit has a positive relationship with its PSR from the profit sharing (mudarabah) financing and securities investment.
The following have contributed to this page: Professor Abdul Ghafar Ismail, Dr Noraina mazuin Sapuan, and nur azura sanusi
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