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Islamic Finance

  Islamic Finance   |   Terms
  • 616
  • January 6, 2022
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Agency-Based Investment Contract

An Islamic investment contract by virtue of which holders of investment accounts (IAHs) appoint the Islamic bank to undertake the investment of their funds on the basis of wakalah contract (agency contract). According to this arrangement, the Islamic bank receives a specified fee or both a specified fee and share of profit. The share of profit is usually used as an incentive for the Islamic bank to outperform the market. This share is payable if the realized profit exceeds a preset level.


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