Joint-Venture Financing For Islamic Banks

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Category: Finance, Banking & Taxation

Published: Thursday, 15 May 2008 14:58

Posted by Saiful Azhar Rosly

The banking sector is poised to face new challenges from high interest rates environment in the coming years. With higher cost of borrowing, the public may postpone their purchases. Not only that, current concern with inflation is making many banks worried about interest-rate risk. Floating rate loans can easily absorb any increase in the overnight offer rate (OPR) but fixed-rate loans such as car loans may not. The same applies to Islamic banks. Those offering fixed al-bai-bithaman ajil (BBA) and al-ijarah thuma albay (AITAB) may soon face difficulties, unless they have a floating-rate option to work with.

Publication: MIERScan, 15 May 2006.