Contractual Risk Transfer in Islamic Home Financing: Analysis in Bank Malaysia

Risk management has implications on pricing, governance arrangements, business practices and strategy. Nowadays, home financing contract offers more in the risk transfer form to increase bank profit. This is parallel with Islamic jurisprudence method al-Kharaj bi al-thaman (gain accompanies liability for loss) al-ghurm bil ghunm justified risk) that determine matching between returns. Malaysian trends buy house. Besides, exists transparency lacking issues clients because of not been informed clearly. Terms conditions each also does reflect clearly transferred client, justifying a determination price made. The assumption occurence inaccurate as different type contract. makes Financial Services Act 2013 providing standards transparent consistent can be used by financial institution less effective. study examines how far level obligation incurred client under various research qualitative using two methods, document analysis semi-stuctured interviews. Document from literature review identify profile, themes element perspective. finds need create parameter banks which are theory according jurisprudence. potential assist authority fnance such Central Bank Malaysia (Bank Negara Malaysia) regulating banking industry so valuation based good practice determined limits.