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Assessing Moral Hazard Problem in Murabahah Financing1

Tanggal Publikasi: 23 Des 2022

Abstrak

Murabahah is a dominant financing instrument in most Islamic banks all over the world. However, price volatility of the good being financed opens a chance for entrepreneurs to gain profit by pretending to be default (moral hazard). Assessment on condition triggering such moral hazard and probability of entrepreneurs to take risk of pretending to be default are being analyzed. Finally, Islamic bank can mitigate it through appropriate bank’s investigation and charging some cost as well as penalty.

Keyword

Murabahah, Moral Hazard, Price Risk, Penalty