ABSTRACT
It is observed that exorbitant dominance of murabaha financing has remained unchanged over the years. This is alarming as per the explanation of major Islamic finance literature. Many studies state that at the beginning of Islamic finance, jurists were a bit lenient in endorsing murabaha concentration on the pretence that such a practice might help infant Islamic finance grow rapidly. Once this model of finance reaches a competitive stage it may strive to shift gradually from the mark-up based/Shari’ah-compliant financing to participatory/trust-based financing upon the pure mode of ‘profit–loss sharing’ (PLS) (Ahmad, 1993). Contrary to this expectation, Islamic financial institutions have been maintaining their financing dominance on murabaha. Many Islamic scholars insist that being Shari’ah compliant does not automatically embody the spirit of Islamic finance. Thus, they are very critical about the current practice of Islamic banks (Kuran, 1995; El-Gamal, 2006; Çizakça, 2011).
