CREDIT RISK MANAGEMENT POLICY (CRMP) FOR MUSHARAKAH PROFIT AND LOSS SHARING CONTRACTS (MPLSc): A CASE STUDY OF AN

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CREDIT RISK MANAGEMENT POLICY (CRMP) FOR MUSHARAKAH PROFIT AND LOSS SHARING CONTRACTS (MPLSc): A CASE STUDY OF AN

ISLAMIC BANK IN MALAYSIA

BY

ROSNAH OMAR

A thesis submitted in fulfilment of requirement for the degree of Doctor of Philosophy in

Islamic Banking and Finance

IIUM Institute of Islamic Banking and Finance International Islamic University Malaysia

OCTOBER 2016

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ABSTRACT

Historically, the Islamic Banks (IBs) had less emphasis on and involvement in Musharakah Profit and Loss Sharing contracts (MPLSc) as they were more concerned with the associated risk in equity investments. This was partly attributed to inadequate knowledge and experience in managing the equity investment risk. As a recent development by IBs to undertake equity investment, it is pertinent that the procedure to formulate the Credit Risk Management Policy (CRMP) framework was studied in this research. The primary objective of the policy research was to explore and describe on the distinctive Shariah Rule Compliant (SRC) characteristic with the salient features of credit risk assessment (CRA) with the credit risk management (CRM) process on the risk sharing principles (RSP) of MPLSc. Considering the limitation of empirical research reviews and lack of available data to explore on this issue, the case study research methodology with semi-structured interviews was adopted in this research. The research objectives and questions explored on the “risky "perception of MPLSc” as well as the extant related theoretical framework with the description provided by the key representatives of an Islamic Bank in Malaysia (IBM) as interview respondents. The IBM’s equity investment in the Musharakah Project Finance (MPF) was evaluated with the project economics and equity investment management. The data analytics on SRC by Shariah Department (SD) in the IBM enhanced the CRMP framework as compared with conventional practice. The comparative review was undertaken with the Conventional Banks (CBs) on credit risk management process which was deemed similar based on regulatory and economic capital management. The semi-structured interviews was to gather the sample data on how the IBM identify, qualify, quantify, manage, monitor and report the RSP for MPLSc with capital management that included the examination of regulatory guidelines and standards in the regulated financial industry. The qualitative data analytics were derived from the identification of the credit risk of the equity investment that was reviewed with the determinant factors that were collated as the research findings. The findings described the ethical behaviour of Shariah compliant adherence by IBM based on the joint-venture contractual obligations. The main contributions were the enhancement from the theoretical framework with the gap analysis in the literature review to redefine the credit risk management process in managing equity investment risk. Finallly with the “CRMP for MPLSc in IB” an incentive was provided in RSP for MPLSc as an alternative financing in equity investment in the IBM.

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صخلم ثحبلا

ABSTRACT IN ARABIC

نامتئلاا ةرطامخ ةرادإ ةسايس موهفم ديدتح لىإ يعلاطتسلاا يعونلا ثحبلا اذه فدهي ( ( رئاسلخاو حبارلأا ميسقت ةكراشم دوقعل )

CRMP

MPLSc

ةيزيلالما ةيملاسلإا كونبلا في )

( ةعيرشلا عم قفاوتلما يقلاخلأا كولسلا ثحبلا فصي .ةلالحا ةساردك اهرايتخا تم تيلا )

IBs

في ميسقت دابم عم ةكركشلما امازتللال ي امتئلاا مييقتلا اسس لع ةيملاسلإا كونبلا لت

(ةرطاخلما ةرطاخلما نامتئا مييقتو مهسلأا في رامثتسلاا ةرادإو عورشلما ياداصتقا لع )

RSP

نم ددعل ةيصخشلا ةلباقلما ءارجإ تم ،اذه لعو .ةيداصتقلااو ةيميظنتلا لالما سر ةرادإو خ ب قلعتلما يرظنلا راطلإا لع ادامتعا ةيملاسلإا فراصلما في ةرطاخلما ةاردإ لامج في ءابر

( ( نم جرختسلما )

CRA

ةرادإ ةسايس موهفم راطإ نس ،لاوس ثحبلا جئاتن رفسس .)

RSP

( نامتئلاا ةرطامخ اسرامم سسس فادهس رركيو ةيديلقتلا فراصلما ةسرامم عم نركقي )

CRMP

ديلقتلا فراصلما نامتئلاا ةرطامخ ةرادإ ةسايس موهفم راطإ نس ،اينثاو .اهيف هتهماسمو ةي

( روطتلما مهسس ةرادإ ايجيتاركساو ةيملاسلإا فراصلما رامثتسبا ةرطاخلما حبر قلعي )

CRMP

( رئاسلخاو حبارلأا ميسقت ةكراشم دوقع عم رامثتسلاا

MPLSc

اهماسم مهس نس ،اثلثاو .)

في ةرطاخلما ميسقت ةسايس ( رئاسلخاو حبارلأا ميسقت ةكراشم عم رامثتسلاا مهسس

MPLSc

)

دوقع ةعجاربم ثحبلا صوس اذبهو .ةيملاسلإا فراصلما في ليدبلا ليومتلل زفالحا دوزي ( رئاسلخاو حبارلأا ميسقت ةكراشم

MPLSc

.رغصلما ليومتلا لذكو ابه صالخا عاطقلا في )

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APPROVAL PAGE

The thesis of Rosnah Omar has been approved by the following:

_____________________________

Mohd Azmi Omar Supervisor

_____________________________

Mustapha Hamat Co-Supervisor

_____________________________

Adewale Abideen Adeyemi Co-Supervisor

_____________________________

Noraini Mohd Ariffin Internal Examiner

_____________________________

Saiful Azhar Rosly External Examiner

_____________________________

Wan Mansor Wan Mahmood External Examiner

______________________________

Mohamed Yousuf Ali Chairperson

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DECLARATION

I hereby declare that this thesis is the result of my own investigation, except where otherwise stated. I also declare that it has not been previously or concurrently submitted as a whole for any other degrees at IIUM or other institutions.

Rosnah Omar

Signature………....………. Date …….……….

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COPYRIGHT

INTERNATIONAL ISLAMIC UNIVERSITY MALAYSIA

DECLARATION OF COPYRIGHT AND AFFIRMATION OF FAIR USE OF UNPUBLISHED RESEARCH

CREDIT RISK MANAGEMENT POLICY (CRMP) FOR MUSHARAKAH PROFIT AND LOSS SHARING CONTRACTS

(MPLSc): A CASE STUDY OF AN ISLAMIC BANK IN MALAYSIA

I declare that the copyright holder of this thesis are jointly owned by the student and IIUM.

No part of this unpublished research may be reproduced, stored in a retrieval system, or transmitted, in any form or by any means, electronic, mechanical, photocopying, recording or otherwise without prior written permission of the copyright holder except as provided below

1. Any material contained in or derived from this unpublished research may be used by others in their writing with due acknowledgement.

2. IIUM or its library will have the right to make and transmit copies (print or electronic) for institutional and academic purposes.

3. The IIUM library will have the right to make, store in a retrieved system and supply copies of this unpublished research if requested by other universities and research libraries.

By signing this form, I acknowledged that I have read and understand the IIUM Intellectual Property Right and Commercialization policy.

Affirmed by Rosnah Omar

……..……….. ………..

Signature Date

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ACKNOWLEDGEMENTS

Firstly, I thank Allah (S.W.T) for providing me the knowledge and opportunity to explore the strength and commitment in completing this thesis. Because of Him, this thesis finds its straight path to participate in the growth of Islamic Banking and its way out to the concept of risk sharing principles. Most importantly, I would like to express my appreciation, gratitude and love to my late parents and members of my family in their effortless support and blessing to strive for the best in all my undertakings.

In essence the completion of my thesis was based on the guidance and perseverance of my supervisor, Prof. Dato Dr. Mohd. Azmi bin Omar who encouraged me with my initial interest and registration in International Islamic University Malaysia (IIUM) Institute of Islamic Banking and Finance (IIiBF). In addition, the recognition goes to the respondents from the Islamic Bank in Malaysia who provided me the added incentive with their structured interview responses in compiling my data collection and analysis leading to the Credit risk Management Policy (CRMP) framework. I sincerely appreciate their openness in sharing their valued experience.

My appreciation also goes to Professor Dr. Abdul Rahim Abdul Rahman, Professor Mansor Ibrahim, Professor Abbas Mirakhor, Mustapha Hamat, Asst.

Professor Ahmad Zamri Osman and Asst. Professor Dr. Adewale Abideen who provided the insight into the hardship of managing a case study research methodology that was alien and new to me in Islamic Finance concept. I would like to thank them for their sincere support, concentration, deliberations and providing me the knowledge to submit my review. The moral support of my PhD colleagues accompanied me in fulfilling the research time throughout my terms in pursuing my PhD with IIiBF. The most understanding companions in discussing my difficulties to complete my thesis were Atiqi Nasution, Hanudin Amin, Jameel Ahmed, Mustafa Aydemir and Mohamed Charif. May I wish them the best in all their endeavours and continue to retain our friendship in the future.

Lastly, I would like to thank all my appreciative friends for their support, namely, Siti Muawanah, Adora, and Norleza in my search for the added believe and confidence that I could and would contribute toward Islamic Finance with risk sharing principles for Musharakah Profit and Loss Sharing contracts in the equity investments globally.

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LIST OF TABLES

Table 2.1 Generic Risks facing Banks 17

Table 2.2 Two types of Shirkah (Musharakah) 25

Table 2.3 Risk Sharing Essential Elements and Conditions 38 Table 2.4 The Comparative Features between Musharakah and Mudharabah 39 Table 2.5 Mudharabah Concepts by Various Scholars in the Research 43 Table 2.6 Types of Mudharabah Models in IBs as Reviewed by Islamic

Scholars 44

Table 2.7 Data on Islamic Banking System: Financing by Concept (RM

Million) 46

Table 2.8 Options to Mitigate Risk with the PLS 50

Table 2.9 Risk Perception: - Risks in Different Modes of Financing (Scale

1-5) 51

Table 3.1 Determination of Underlying Factors in Assessing the MPC2 70 Table 3.2 Risk Profile of Conventional vs. Islamic Banks 94

Table 3.3 IFSB Principles for Credit Risk 96

Table 3.4 IFSB Guidelines on Risk Management 99

Table 4.1 Research Objectives and Core Research Questionnaires 118 Table 4.2 Risk management process with the list of proposed respondents 125

Table 5.1 Overview of Coding Analytics 169

Table 5.2 Presentation of Credit Risk (Profit Payout Risk, Default Risk,

Withdrawal Risk, Connected Parties Risk) by the CEO of the IB 174 Table 5.3 Triangulation Based on Observations during the Interviews 198 Table 6.1 Stage Model of Qualitative Content Analysis by Berg (2004, p.

286) 237

Table 6.2 Data Analytics to Describe the CRMP Framework 239

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Table 6.3 CRMP Framework and Data Analytics on SCE for RSP for

MPLSc in the IBM 243

Table 6.4 Prudential Regulation and Supervision in Accordance to B2-P2

Standards and IFSB Guidelines 246

Table 6.5 Review of Research Objectives in ‘CRMP for MPLSc in the IB’ 263 Table 6.6 Formulating the Risk Management Process in the “CRMP for

MPLSc in IB” 268

Table 6.7 Design of the CRMP with the ‘CRM Process’ and ‘Integrated

Practice’ 269

Table 6.8 Descriptive Analysis of Risk Management Process in the CRMP

Framework 275

Table 6.9 Functional Roles and Responsibilities of the Respondents in the

IBM 285

Table 6.10 Revolving Concept on Risk Management Process in the “CRMP

for MPLSc in IB 293

Table 7.1 Updated Generalised Review on RSP for MPLSc in the IBM 300 Table 7.2 Significant Review in CRM Process with RSP for MPLSc in the

MPF 306

Table 7.3 The Limitations of the Research with A Single Case Study which were mainly External Factors in Nature [(Ascarya And Yumanita

(2006)] 316

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LIST OF FIGURES

Figure 2.1 ANP Network of Low PLS financing using Super decisions 35

Figure 3.1 Function of Risk Management Practices 75

Figure 3.2 The Proposed CRMP Framework with the Operational Risk

Management Strategy 77

Figure 3.3 CRMP Framework with “CRMP for MPLSc in IB” 104

Figure 4.1 CBs Theoretical Framework for Risk Management (Sattar, 2010) 122 Figure 4.2 Key Stages in the Research Process by Silverman (1985) 129 Figure 4.3 Stage Model of Qualitative Content Analysis by Berg (2004, p.

286) 155

Figure 5.1 Chain of Evidence in Data Analytics (Yin, 2009) 167

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LIST OF ABBREVIATIONS

AAOIFI Accounting and Auditing Organization for Islamic Financial Institutions

BCBS Basel Committee on Banking Supervision BIS Bank for International Settlements

B11-P2 Basel 11 Pillar 2 standards (B11-P2)

BAFIA Banking and Financial Institutions Act 1983 (BAFIA)

BBD Business Banking Department

BMA Bahrain Monetary Authority (The Central Bank of Bahrain)

BNM Bank Negara Malaysia

BODs Board of Directors

CAR Capital Adequacy Ratio

CAS Capital Adequacy Standards (CAS)

CBs Commercial Banks

CEO Chief Executive Officer

CRA Credit Risk Assessment based on the review of credit risk

CRM Credit Risk Management process

CRMD Credit Risk Management Department

CRMP Credit Risk Management Policy

DCR Displaced Commercial Risk

EVA Equity Valued at Risk

FD Finance Department

FIs Financial Institutions

GRMD Group Risk Management Division

IAHs Investor Account Holders

IBs Islamic Banks

IBM Islamic Bank in Malaysia (in the case study)

IDB Islamic Development Bank

IFSA Islamic Financial Services Act issued by BNM (2013) IFIs Islamic Financial Institutions

IFSB Islamic Financial Services Board

IIFS Institutions Offering Islamic Financial Services INCEIF International Centre for Education in Islamic Finance

IRB Internal Rating Based

IRR Investment Risk Reserve

IRTI Islamic Research and Training Institute in Jeddah

ISRA International Shariah Research Academy for Islamic Finance

LD Legal Department

MCR Minimum Capital Requirement (imposed by BNM)

MPF Musharakah Project Finance (presentation by CEO of IBM) MPLSc Musharakah Profit and Loss Sharing Contracts

PER Profit Equalization Reserves

PLC Public Listed Company

PLS Profit Loss and Sharing (structure of Musharakah equity investment)

PLSc Profit and Loss Sharing contracts

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PSIA Profit Sharing Investment Account

RSP Risk Sharing Principles

RWA Risk weighted assets (regulated by BNM)

SA Standard Approach (imposed on CRM by BNM in IBs)

SC Shariah Committee in the the IBM

SCE Shariah Compliant Endorsement by the IBM

SD Shariah Department in the IBM

SGF Shariah Governance Framework by BNM

Shariah Islamic Laws

SRC Shariah Rule Compliant

SME Small Medium Enterprise

SPV Special Purpose Vehicle (in the MPF by IBM)

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LIST OF TERMINOLOGIES

Al-Quran The Holy Book of Islam Fiqh Islamic jurisprudence Gharar Uncertainty

Hadith Prophet Muhammad S.A.W’s (p.b.u.h) saying, action and tacit approval

Ijarah Lease

Istisna A contract to manufacture goods Maqasid al-Shariah Objectives of Islamic law

Murabahah A sale of certain goods with a disclosed cost and mark-up Mudharabah A contract between the capital provider as rab-al mal and the

enterprise to be managed by the entrepreneur as mudarib Musharakah A contract of profit and loss sharing

Muslim A person who follows religion of Islam Qardhul Hassan Benevolent loan

Riba Interest Shariah Islamic law

Wa’ad A promise or undertaking

Wakalah A contract of agency to perform a certain task on its behalf

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CHAPTER ONE INTRODUCTION

1.1 BACKGROUND OF RESEARCH

In general, banking activities were an important part of the economic system whose systemic importance for the stability of national, regional and global financial system cannot be discountenanced (Archer et.al, 2010; Askari et.al 2009, Iqbal and Mirakhor, 2007; Usmani, 2007 and Khan and Ahmed, 2003). During the last 30 years, Islamic finance and banking had contributed significantly to the development of Islamic Economics (Ayub, 2007; El-Gamal, 2006 and Chapra, 1993). Islamic banking and financial system was introduced to ensure that all the banking business and financing were in accordance with the Islamic jurisprudence of the Holy Quran and the Sunnah.

The term “Islamic Finance “(IF) or “Islamic Banking” described in many ways by renowned pioneering scholars generally refered to a system of finance or banking activity which was consistent with the Islamic Laws commonly known as Shariah (El- Tiby, 2011; Ghafar, 2010; Mirakhor and Zaidi,, 2007; Zaher and Hassan, 2001; Khan and Ahmed, 2001; Vogel and Hayes, 1998 and Khan, 1985)

The emergence of Islamic banking operations in the early 1980’s had been expressed as a replication of the conventional banking especially commercial banking practices (Shaikh and Jalbani, 2008; Al-Jarhi, 2005; Wilson, 2002 and Khan, 1994).

Islamic Banks (IBs) had replicated the business of Conventional Banks (CBs) arising from the dual-banking practices with “window concept” in some countries (Iqbal and Llewellyn, 2002 and Wilson, 2002). Historically, the business growth in Islamic IBs was closely mapped with the activities and development of CBs in offering Islamic finance opportunities globally (El-Tiby, 2011; Askari et.al, 2009; Grais and

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Kulathungga, 2007; Ghafar, 2002 and Zaher and Hassan, 2001). The Securities Commission of Malaysia (SEC) in its 2^nd Quarterly Bulletin (2011) asserted that,

“This began in 1974 where Islamic Banks took a systemic approach in the form of debt-based financing via replicating conventional products and what was generally termed as the Shariah rule-compliant (SRC) approach.”

Without prejudice to the existing conventional banking system, the introduction of Islamic banking provided banking customers with an added choice.

Accordingly, Bahrain Monetary Authority (BMA), (2002, p.9) expressed that “Islamic Banking creates the alternative financial system to conventional banking with Shariah compliance features”. In this regard, it may be stated that the development of Islamic finance and banking was based on the premise of adherence to the injunction of the Holy Quran and the Sunnah (which was the saying and the examples of practices set by the Prophet Mohammed) manifested by the Shariah rule-compliance as practiced by IBs. According to Ayub (2007); Iqbal and Mirakhor (2007) and Chapra (2005), the foundational framework upon which the IBs system were built derived from basic understanding of the Quran 2 verse 275 where Allah SWT says: .

“But God hath permitted trade but forbidden usury” whereby those who eat Riba (usury) will not stand (on the Day of Resurrection) except like the standing of a person beaten by Shaitan (Satan) leading him to insanity”

Fundamentally, the prime condition under SRC in relation to the trade was derived from the basis of contract of Al-Bay’ exchange mechanism for property rights and prohibition of riba (usury) in the consideration (Vogel and Hays, 2009; Khan, 2008 and Khan, 1987). A system that was very different from Riba in which the risk in a transaction would shift or transferred from one party to another, and not based on risk sharing principles (RSP). Henceforth, only RSP can fit the infaq criteria narrated

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by the verses from Al-Baqarah 260-282 (International Shariah Research Academy for Islamic Finance (ISRA), 2012; Askari et.al, 2012 and Iqbal and Mirakhor, 2007).

From a classical perspective, among many other factors what makes Islamic banking distinct, therefore was its inherent risk-sharing philosophy. However, notwithstanding the global appeal and burgeoning practice of Islamic banking and finance, a cursory look at the statement of financial position of typical Islamic financial institutions (IFIs) especially IBs would indicate a lesser preference for equity investments based on risk- sharing financing model like Musharakah with Profit and Loss Sharing contracts (MPLSc).

Even when it was supposed to be a main point of distinction from the CBs, the relatively low preference for Profit and Loss Sharing (PLS) financing models among IBs had been taken as being reflected in operational efficiency and dictated by business reality. PLS financing models may be relatively riskier and may have implication for the economic bottom lines of the IFIs.

Such ironic practical disposition of the IFIs seemed to also suffer from lack of research attention as there appears an apparent dearth of studies expounding on this issue. Although the extant literature documents plausible reasons why this may be the case, the thesis topic in this research was that such practices by the IFIs may be a reflection of inadequate credit risk management (CRM) process on their part. It was from this concern that this exploratory research on the Credit Risk Management Policy (CRMP) of the IFIs was derived. This exploratory study described the identification and qualifications for Shariah compliance on the credit risk assessment (CRA) and management in the equity investment of the IFIs. This was with the aim of formulating a CRMP framework in which the PLS can be formulated in the IBs. It was envisaged that the formulation of a CRMP framework would help reduce the reluctance of the

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IBs to engage in the equity-investments. This would aligned the ‘mechanics’ – operational efficiency - and the ‘spirit’ –of profit and loss sharing- of IBs to be reflected in a lower risk-weighted asset composition in compliance with regulatory guidelines.

1.2 STATEMENT OF THE PROBLEM

The high Risk Weighted Assets (RWA) of IBs relative to regulatory compositions may be linked to their reluctance to increase business partnerships in joint ventures. As noted by studies such as Askari et al. (2012); El Tiby (2011), Ascarya and Yumanita (2006); El Hawary et al. (2005), Abalkhail and Presley (2002) and Dar and Presley (2000), plausible reasons for such reluctance on the part of the IBs included but not limited to an apparent inadequate expertise in risk sharing management, relative newness of the PLS in IBs, as well as an apparently poor understanding and knowledge of the RSP for MPLSc.

RSP for MPLSc partnership presented a unique risk sharing characteristic within the CRMP framework especially when situated in the context of the capital adequacy requirements imposed by the regulator (Haron and Hock, 2007 and Khan, 2005). It may be logical therefore, to consider that credit risk analytic in PLS required a distinctive analysis in the RSP for MPLSc in equity investment as compared to conventional debt transactions (El-Tiby, 2011; Archer and Karim 2009; Iqbal and Zaidi, 2007 and Wilson, 2002). Considering the peculiar challenges with PLS equity investment there was the need for a prudent CRMP framework to manage the investment risk arising from the equity participation in the entity. This was because the implications on risk sharing had to be complimented with a prudent CRMP framework that provided the incentive to deplore more capital based equity investment with RSP

CREDIT RISK MANAGEMENT POLICY (CRMP) FOR MUSHARAKAH PROFIT AND LOSS SHARING CONTRACTS (MPLSc): A CASE STUDY OF AN

CREDIT RISK MANAGEMENT POLICY (CRMP) FOR MUSHARAKAH PROFIT AND LOSS SHARING CONTRACTS (MPLSc): A CASE STUDY OF AN

ISLAMIC BANK IN MALAYSIA

BY

ROSNAH OMAR

A thesis submitted in fulfilment of requirement for the degree of Doctor of Philosophy in

Islamic Banking and Finance

IIUM Institute of Islamic Banking and Finance International Islamic University Malaysia

OCTOBER 2016

ABSTRACT

صخلم ثحبلا

ABSTRACT IN ARABIC

نامتئلاا ةرطامخ ةرادإ ةسايس موهفم ديدتح لىإ يعلاطتسلاا يعونلا ثحبلا اذه فدهي ( ( رئاسلخاو حبارلأا ميسقت ةكراشم دوقعل )

ةيزيلالما ةيملاسلإا كونبلا في )

( ةعيرشلا عم قفاوتلما يقلاخلأا كولسلا ثحبلا فصي .ةلالحا ةساردك اهرايتخا تم تيلا )

في ميسقت دابم عم ةكركشلما امازتللال ي امتئلاا مييقتلا اسس لع ةيملاسلإا كونبلا لت

(ةرطاخلما ةرطاخلما نامتئا مييقتو مهسلأا في رامثتسلاا ةرادإو عورشلما ياداصتقا لع )

( ( نم جرختسلما )

ةرادإ ةسايس موهفم راطإ نس ،لاوس ثحبلا جئاتن رفسس .)

( نامتئلاا ةرطامخ اسرامم سسس فادهس رركيو ةيديلقتلا فراصلما ةسرامم عم نركقي )

ديلقتلا فراصلما نامتئلاا ةرطامخ ةرادإ ةسايس موهفم راطإ نس ،اينثاو .اهيف هتهماسمو ةي

( روطتلما مهسس ةرادإ ايجيتاركساو ةيملاسلإا فراصلما رامثتسبا ةرطاخلما حبر قلعي )

( رئاسلخاو حبارلأا ميسقت ةكراشم دوقع عم رامثتسلاا

اهماسم مهس نس ،اثلثاو .)

في ةرطاخلما ميسقت ةسايس ( رئاسلخاو حبارلأا ميسقت ةكراشم عم رامثتسلاا مهسس

)

دوقع ةعجاربم ثحبلا صوس اذبهو .ةيملاسلإا فراصلما في ليدبلا ليومتلل زفالحا دوزي ( رئاسلخاو حبارلأا ميسقت ةكراشم

.رغصلما ليومتلا لذكو ابه صالخا عاطقلا في )

APPROVAL PAGE

DECLARATION

COPYRIGHT

INTERNATIONAL ISLAMIC UNIVERSITY MALAYSIA

DECLARATION OF COPYRIGHT AND AFFIRMATION OF FAIR USE OF UNPUBLISHED RESEARCH

CREDIT RISK MANAGEMENT POLICY (CRMP) FOR MUSHARAKAH PROFIT AND LOSS SHARING CONTRACTS

(MPLSc): A CASE STUDY OF AN ISLAMIC BANK IN MALAYSIA

ACKNOWLEDGEMENTS

TABLE OF CONTENTS

LIST OF TABLES

LIST OF FIGURES

LIST OF ABBREVIATIONS

LIST OF TERMINOLOGIES

CHAPTER ONE INTRODUCTION