Islamic banks and investment depositors: their relationship and its accounting implications under the profit and loss sharing `Mudarabah'' (Ph.D. Thesis)

Long term shareholders and short term investment depositors account for the most significant financial contributions to Islamic banks. The shareholders and depositors seek positive returns from borrowers' potential gains, particularly due to the prohibition of riba in Islamic financial systems. This thesis investigates from a shari`a perspective how investment returns are dispersed to investors, measures how financial backers are dealt with, and determines that improvements are necessary. A new accounting model that is in greater compliance with shari`a is created to provide more appropriate returns to depositors. Topics examined include: an overview of profit and loss sharing, the framework of Islamic banking, contracts between banks and investors, historical developments of mudaraba , 'corporate mudaraba,' net income determination, and accounting models.