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Jordan Journal of Islamic Studies

Jordan Journal of Islamic Studies

Abstract

The main aim of the study reporting in the article below was to survey the main threats that Jordanian Islamic banks face in three types of investment contracts: “Mudaraba” (Profit-and-loss sharing), Musharakah (joint venture) and Istisna (Manufacturing Finance). After analyzing the data both quantitatively and qualitatively, it has turned out to us that the current Islamic banking system is probably powerless in identifying and therefore measuring the real cost of these three types of investment contracts, which are definitely risky investment avenues. What is worth noting here is that almushtagaat almaaliah (financial derivatives) negatively affects the cost of investment in the Islamic banking system. Needless to say, the risks associated with Islamic banking are surely different from those of conventional banking.

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