Shari’ah perspective ratio of islamic financing: Base profit rate vs rule 78

Abstract

In Malaysia, Islamic financing contract has various of concepts for example Bai Bithaman Ajil (BBA), Al-Ijarah Thumma Al-Bai (AITAB) and Musharakah. One of the model is used in calculating financing Islamic concept is called Rule 78. This model is widely used by Islamic finance/banking in Malaysia. However, there are lack of Shari'ah in this formulation based on parameter and also foundation of its formulation. Hence, an alternative model is more Shari'ah perspective is build, namely base pro t rate (BPR). Therefore, the intention of this paper is to investigate the existing model and alternative model used by Islamic finance/banking that is Rule 78 and BPR, respectively based on Shari'ah perspective.