Profit and loss sharing- the flagship of Islamic finance

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Raising funds through profit and loss sharing (PLS) has a number of advantages over borrowing at interest. Some of these benefit entrepreneurs; others benefit society. We first look at benefits to entrepreneurs.

 

Perhaps the most important strength of raising capital on the basis of PLS is that rewards to investors are linked to the performance of the businesses they finance. In profits and loss sharing contracts, dividends to investors depend directly on the profitability (efficiency) of the enterprise they finance............ Download the full article in pdf attachment (below)

Abdul Karim Abdullah

Abdul Karim Abdullah @ Leslie Terebessy is an Assistant Research Fellow at IAIS Malaysia.