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  • The Financial Encyclopedia
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Islamic Finance

  Islamic Finance   |   Terms
  • 785
  • August 8, 2020
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Profit Rate Risk

With respect to unrestricted investment account (URIA) holders, it is the risk facing an Islamic bank or financial institution (IFI) when URIA holders may withdraw their funds at short notice due to their losing profit share. This happens because the returns earned on investment account funds become noncompetitive relative to the returns being offered by other competitors, both Islamic and conventional.

The profit rate risk (also known as rate of return risk) leads to another type of risk: withdrawal risk.


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