FINANCING METHODS THROUGH MUSHARAKAH CONTRACT TO REDUCE RISKS: JORDAN ISLAMIC BANK AS A MODEL

Abstract

This study aimed to explain the risks that occur in Islamic financing with musharakah contracts at the Islamic Bank of Jordan, as well as to find appropriate solutions to reduce these risks. These risks, if not properly anticipated, will affect the reputation of the governance of Islamic financial institutions, thus placing Islamic financial institutions in a situation of liquidity risk and operational risk of makhatir tasyghiliyyah. This study also to recommend based on the principles of Syariah laws that will benefit both parties; either Islamic financial institutions (Jordan Islamic Bank) or customers. This study used content analysis on Jordan Islamic Bank (JIB) financial reports from the year of 2015 until 2019. Among the findings of the study found that there is clear financial confusion in the musharakah contract for Jordanians due to laws that are not continuously developed and in the financing of employee housing. obvious financial confusion in Jordanian individual participation that is decreasing due to laws that are not continuously developed. This study suggests laws to be introduced to help JIB to increase the demand for the musharakah contracts so that it serves all parties, individuals, companies, small and large institutions, and employees. Risks should be distributed through opening investment funds that serve all the requirements of the Jordan Islamic Bank in all its banking operations by participation and diminishing participation. Partnership between JIB and other bank in another country should be increased through access to its policies. International investment portfolios should be created to allow the Jordan Islamic Bank to participate with other banks outside the country and participate in development, social and reconstruction projects.