The Profit-and-Loss Sharing Principle in Islamic Economics:  Concepts, Implementation, and Challenges in Mudharabah and Musyarakah Contracts

Agus Supriatna; Euis Amalia; Desmadi Saharuddin

doi:10.55927/mudima.v6i6.86

Authors

Agus Supriatna Universitas Pamulang
Euis Amalia Universitas Pamulang
Desmadi Saharuddin Universitas Pamulang

DOI:

https://doi.org/10.55927/mudima.v6i6.86

Keywords:

Islamic Banking, Profit and Loss Sharing, Sharia Fintech, Blockchain, Risk Management, Systematic Mapping Study (SMS)

Abstract

The Islamic financial landscape faces a persistent "PLS Paradox" characterized by a structurally depressed portfolio of profit-and-loss sharing partnerships amid the dominance of debt-like synthetic instruments. This systematic mapping study (SMS) deconstructs the institutional barriers that perpetuate the marginalization of Mudharabah and Musyarakah contracts and formulates financial technology integration strategies as a mitigation mechanism for agency risk. To achieve this objective, the study executed a structured Systematic Mapping protocol to categorically chart the global research landscape. Article retrieval was sourced from the Scopus database and the Watase Uake system to eliminate the risk of predatory journal inclusion. A rigorous screening process yielded 57 cross-national peer-reviewed articles (2016–2026), which were analyzed using a hybrid approach combining qualitative thematic analysis and bibliometric visualization of keyword co-occurrence via VOSviewer. The network visualization and thematic synthesis reveal that Islamic banks engage in defensive adaptation by shifting risks (risk-transfer) toward Murabahah contracts. This maneuver is triggered by acute information asymmetry in emerging markets, which breeds moral hazard in the form of profit underreporting, thereby skyrocketing monitoring costs. These micro-level frictions are further exacerbated by Basel III regulations that impose high equity risk-weightings (300%–400%) on PLS portfolios. Intriguingly, the findings confirm that Sharia Fintech integration—specifically blockchain, smart contracts, and artificial intelligence (AI)-driven credit scoring—can radically curtail operational transaction costs by providing real-time cash flow transparency.This study concludes with the necessity of reconceptualizing Sharia compliance from mere formal contractual validity (legal form) toward the economic substance of risk-sharing. Consequently, monetary authorities are urged to restructure macroprudential risk-weighting incentives for digitally enabled profit-sharing instruments. Future research should empirically validate the "Risk-Sharing Stability Theory" using mixed-methods to quantify blockchain efficiency in cross-border SME financing.

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