AGENCY PROBLEMS IN MUDHARABAH FINANCING THE CASE OF SHARIA (RURAL) BANKS, INDONESIA
ADNAN, MUHAMMAD AKHYAR
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This study is concerned with agency problems that aries in Mudharabah, financing in Indonesia Rural Sharia Banks. The study is focused first ion project attributes, especially those that might be considered in dealing with Mudharabah financing; and second the Mudharibs’ attributes financed by the banks under consideration. The research is explorative in nature, with a combined qualitative and quantitative approach undertaken. The qualitative approach identifies the factors which are deemed by the banks as relevant to Mudharabah financing, both from Mudharabah projects and Mudharib points of view. The Quantitative method is then applied to examine statistical factors. The study was conducted in coorperation with eighty four out of 89 Islamic or Sharia Rural Banks in Indonesia, with 64 respondents (76.19 per cent) returning questionnaires. Certain Bank Managers were also interviewed extensively. The number of returned questionnaires included in this study is statistically adequate. The Study found that there are six attributes considered from the Mudharabah projects point of view. These include: the prospect of project availability of collateral, healthiness of project, project’s financial statements, clarity of contract conditions, and conformity of time period. On regard to Mudharib attributes, the study concludes that five characteristic were considered important. They include: business capacity, (personal) collateral, Mudharib’s reputation and family background, and their business commitments. Further quantitative analysis has been conducted to examine these attributes. This filters all attributes into five most influential factors. They are; business skill, business reputation, business commitment (all are related to Mudharib), financial report of project and length of contract of project.