Proposing Islamic Elements As A Parameter Of Credit Evaluation Process In Commercial Financing Approval : A Study Of Dual-Banking In Malaysia
The aim of study is to explore on what and how Islamic elements can be applied as a parameter of credit evaluation process in commercial financing approval. To achieve this, the study is first find out the current practices of credit evaluation process within dual-banking approach in Malaysia and fi...
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| Summary: | The aim of study is to explore on what and how Islamic elements can be applied as a parameter of credit evaluation process in commercial financing approval. To achieve this, the study is first find out the current practices of credit evaluation process within dual-banking approach in Malaysia and find out there any differences between different types of banks approach regarding the evaluation process of commercial financing practice. This research also aims to implement a good parameter for credit evaluation process in Islamic banking approach. The study uses interview-based approach to the business financing officers that deal with business financing approval particularly. The study also interviews the shariah advisers to get their views and opinions regarding in proposing Islamic elements as a parameter of credit evaluation process in commercial financing approval for Islamic banking approach since there are different practices in dual-banking practices in term of nature of contracts and nature of risk management activities in Islamic banking approach. This study focuses on inductive approach and therefore the method used in this study is qualitative approach. This research also choose commercial financing approval because the elements and tools applied in evaluation process of commercial credit application are still same in practice within dual-bank approach as well as there are complexities in evaluation process as more difficult to analyze, Since the Islamic banking approach used different types of contracts in commercial financing such as Mudharabah, Murabahah, Musharakah, Bai' As-salam, Bai' Al-Istisna' and Ijarah financing contracts and beside the determinant of risk-sharing concept are used in contracts makes this study to focus more on commercial financing approval. The finding from this study found that Islamic element should be added in credit evaluation process and these are tools and guidelines for Islamic banks to refer the development of the parameter in commercial financing activities. The implementation of Islamic elements as a parameter of credit evaluation process in commercial financing approval are worthy to be applied by Islamic bank approach as it is essential instrument and suggestion to support some strategy to cultivate more Islamic elements and practices in making financing decision. |
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