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Principal-Agent Preferences in Imperfect Markets: Theoretical Analysis on Murabahah and Ijarah

Journal of Islamic Monetary Economics and Finance · Vol. 5 No. 1 (2019) · hlm. 117–144

DOI
10.21098/jimf.v5i1.1050
ISSN
2460-6618, 2460-6146
Terbit
2019-05-16
Penerbit
Bank Indonesia
Bahasa
eng

Abstrak

This paper aims to determine the optimal contract for the principal and the agent in imperfect market, when murabahah and ijarah are used. The financial contracting enforceability approach is employed to determine the contract that maximizes the value of the firm subject to agents’ constraints when the shock is low and high, and regarding market frictions. Furthermore, this approach allows us to assess the level of market frictions that agents may bear in case of low shock and high shocks. Findings reveal that the simulated values of the market frictions’ parameters for both contracts increase when moving from the low shock to the high shock. Such evidence implies that the agent is more likely to cheat and hide significant information about the project when the shock is high. As a response to this higher risk, the simulated values of the profit margin parameters for the principal rise also when the shock is high in order to compensate for the increase of market frictions and mitigate conflicts of interest. By comparing both contracts based on the simulated optimal values of the firm, it is noticeable that the gap between both contracts is very tight, which can be attributed to their common debt-based financial arrangements. However, the results show that ijarah allows the principal and the agent to generate the highest value in case of low shock and high shock, comparing to murabahah. Therefore, ijarah seems to be more attractive for the principal and the agent than murabahah.

Kata kunci

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30 penulis · 47 tautan kepenulisan bersama · 19 lintas organisasi

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  • International Islamic University Malaysia
  • IPB University
  • Auro University
  • Al-Hikmah University
  • Saudi Arabian Monetary Authority
  • Universitas Syiah Kuala
  • Walisongo State Islamic University
  • Organisasi lain
  • Afiliasi tidak diketahui
  • Organisasi berbeda
  • Organisasi sama
  • Afiliasi tidak diketahui
  • Garis lebih tebal = lebih banyak artikel bersama · lingkaran lebih besar = lebih banyak artikel
Tampilkan sebagai tabel
Rekan penulisOrganisasiArtikel bersama
Laily Dwi ArsyiantiIPB University2
Adewale Abideen AdeyemiInternational Islamic University Malaysia2
Muh Zul Hazmi RapiInternational Islamic University Malaysia2
Syarah Syahira Mohd YusoffInternational Islamic University Malaysia2
Jarita DuasaInternational Islamic University Malaysia1
M. Shabri Abd. MajidUniversitas Syiah Kuala1
Weni HawariyuniInternational Islamic University Malaysia1
Khalifah Muhamad AliIPB University1
Mohammad IrfanAuro University1
Sonali DhimmarAuro University1
Mohd ZahidAfiliasi tidak diketahui1
Nasrul Fahmi Zaki FuadiWalisongo State Islamic University1
Fahami Muhammad AnisInternational Islamic University Malaysia1
Nik Hadiyan Nik AzmanUniversiti Sains Malaysia1
Norzitah Abdul KarimInternational Islamic University Malaysia1
Syed Musa Syed Jaafar AlhabshiInternational Islamic University Malaysia1
Razali HaronInternational Islamic University Malaysia1
Mohamed Yassine KhouildiInternational Islamic University Malaysia1
Lina Nugraha RaniUniversitas Airlangga1
Permata WulandariUniversity of Indonesia1
Adhitya GinanjarInternational Islamic University Malaysia1
Nur Hazirah HamdanInternational Islamic University Malaysia1
Achmad HidayatInternational Islamic University Malaysia1
Nur Farhah MahadiAl-Hikmah University1
Muhammad‐Bashir Owolabi YusufAl-Hikmah University1
Farah Farhana JauhariInternational Islamic University Malaysia1

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Sumber metadata: OAI-PMH (metadata jurnal) http://www.jimf-bi.org/index.php/JIMF/oai, pertama di-harvest 9 Nov 2026, terakhir terlihat 9 Nov 2026.
Metadata asli (oai_dc) 
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	<dc:title xml:lang="en">Principal-Agent Preferences in Imperfect Markets: Theoretical Analysis on Murabahah and Ijarah</dc:title>
	<dc:creator xml:lang="en">Ajmi, Hechem</dc:creator>
	<dc:creator xml:lang="en">Abdul Aziz, Hassanuddeen</dc:creator>
	<dc:creator xml:lang="en">Kassim, Salina</dc:creator>
	<dc:creator xml:lang="en">Mansour, Walid</dc:creator>
	<dc:subject xml:lang="en">Murabahah,</dc:subject>
	<dc:subject xml:lang="en">Ijarah,</dc:subject>
	<dc:subject xml:lang="en">Conflict of Interest</dc:subject>
	<dc:subject xml:lang="en">Monte-Carlo Simulation</dc:subject>
	<dc:subject xml:lang="en">Market Frictions</dc:subject>
	<dc:subject xml:lang="en">Optimal Contract</dc:subject>
	<dc:description xml:lang="en">This paper aims to determine the optimal contract for the principal and the agent in imperfect market, when murabahah and ijarah are used. The financial contracting enforceability approach is employed to determine the contract that maximizes the value of the firm subject to agents’ constraints when the shock is low and high, and regarding market frictions. Furthermore, this approach allows us to assess the level of market frictions that agents may bear in case of low shock and high shocks. Findings reveal that the simulated values of the market frictions’ parameters for both contracts increase when moving from the low shock to the high shock. Such evidence implies that the agent is more likely to cheat and hide significant information about the project when the shock is high. As a response to this higher risk, the simulated values of the profit margin parameters for the principal rise also when the shock is high in order to compensate for the increase of market frictions and mitigate conflicts of interest. By comparing both contracts based on the simulated optimal values of the firm, it is noticeable that the gap between both contracts is very tight, which can be attributed to their common debt-based financial arrangements. However, the results show that ijarah allows the principal and the agent to generate the highest value in case of low shock and high shock, comparing to murabahah. Therefore, ijarah seems to be more attractive for the principal and the agent than murabahah.</dc:description>
	<dc:publisher xml:lang="en">Bank Indonesia</dc:publisher>
	<dc:date>2019-05-16</dc:date>
	<dc:type>info:eu-repo/semantics/article</dc:type>
	<dc:type>info:eu-repo/semantics/publishedVersion</dc:type>
	<dc:type xml:lang="en">Peer-reviewed Article</dc:type>
	<dc:format>application/pdf</dc:format>
	<dc:identifier>https://jimf-bi.org/JIMF/article/view/1050</dc:identifier>
	<dc:identifier>10.21098/jimf.v5i1.1050</dc:identifier>
	<dc:source xml:lang="en">Journal of Islamic Monetary Economics and Finance; Vol. 5 No. 1 (2019); 117-144</dc:source>
	<dc:source>2460-6618</dc:source>
	<dc:source>2460-6146</dc:source>
	<dc:source>10.21098/jimf.v5i1</dc:source>
	<dc:language>eng</dc:language>
	<dc:relation>https://jimf-bi.org/JIMF/article/view/1050/749</dc:relation>
</oai_dc:dc>