Author

• Sajad Seiflu

Abstract

The management of the incentive structure of depositors is one the fundamental
things that directly affects the banks activities and their profit. In the traditional
banking system, depositors do receive a fixed interest rate; regardless of the profit
that the bank earns from their funds. Considering the fact that this fixed interest rate
is Riba and hence not permissible, this approach is not applicable for Islamic banks.
So Islamic banks do share the depositors in the profits that they earn to motivate
depositors incentives. However, there has always been a concern that because bank
depositors are mostly risk-avoider and their aim is to get fixed return on their
deposits and because of the fact that according to the nature of Islamic banking, the
profit of the Islamic banks and hence the depositors is not a fixed and predetermined
one and depends on the real sector of the economy, the incentive of the Islamic
banks depositors will be damaged. The solution used in Iranian Islamic banks to
solve this problem is to pay \"ALALHESAB\" fixed rate of profit to the depositor.
But, this solution has been questioned by many researchers and accused of being
Riba. This paper tries to provide a new way for solving this problem. The idea is to
provide Special investment account in Islamic banking system. This account can pay
fixed returns to depositors and simultaneously does not face the problems of
ALALHESAB fixed rate of profit.

Keywords

• interest-free banking
• specific investment accounts
• fixed income specific investment accounts