Investigating Participatory Financing Methods in Islamic Banking Using the Structure-Conduct-Performance (SCP) Paradigm 

One of the concerns of some Islamic finance specialists is the Sariah compliance of banking services. This is a greater concern about participation contracts which are more complicated especially in terms of profit sharing. Several Islamic finance researchers have suggested solutions to it. The main objective of this paper is to investigate the feasibility and the effect of applying these solutions. In fact, we are looking for the answer to this question, which one is the most appropriate solution considering the environmental conditions and operational capability of the banking system of the country. For this purpose, we have used the Structure-Conduct-Performance Paradigm (SCP). The result of this research shows that the use of incentive mechanisms in the participation contracts among the different suggested solutions is more consistent with existing restrictions.