Agency theory in explaining Islamic financial contracts

Zelhuda Shamsuddin, Abd. Ghafar Ismail

Research output: Contribution to journalArticle

7 Citations (Scopus)

Abstract

In this paper, we explore the concept of agency theory in a conventional perspective, to understand the types of agency problems emerging in the contractual relationship context. However, many agency contracts that have been observed are incomplete. Completeness in the contractual agency relationship contributes to the reduction of the monitoring cost of contracting parties and there is a scarcity of literature which has fueled the effort to discuss agency relationship in Islamic financial contracts and agency problems. For such contract to succeed, the paper provides an initial baseline to understand how Tawhid epistemology elements can be used to facilitate and deter different goals, different levels of information, also the opportunism behavior in Islamic financial contracts.

Original languageEnglish
Pages (from-to)530-545
Number of pages16
JournalMiddle East Journal of Scientific Research
Volume15
Issue number4
DOIs
Publication statusPublished - 2013

Fingerprint

Financial contracts
Agency relationship
Agency theory
Agency problems
Completeness
Monitoring costs
Scarcity
Opportunism
Contracting
Epistemology

Keywords

  • Agency theory
  • Contract
  • Principal-agent relationship
  • Tawhidi epistemology

ASJC Scopus subject areas

  • General

Cite this

Agency theory in explaining Islamic financial contracts. / Shamsuddin, Zelhuda; Ismail, Abd. Ghafar.

In: Middle East Journal of Scientific Research, Vol. 15, No. 4, 2013, p. 530-545.

Research output: Contribution to journalArticle

Shamsuddin, Zelhuda ; Ismail, Abd. Ghafar. / Agency theory in explaining Islamic financial contracts. In: Middle East Journal of Scientific Research. 2013 ; Vol. 15, No. 4. pp. 530-545.
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