Abstract:

Islamic bank has not known a significant growth in Lebanon. The assets of Islamic banks in Lebanon do not exceed 1% of the total banking assets, with only five Islamic banks in the country. Also, in Lebanon the balance sheet of Islamic banks appears that the percentage of PLS financing is very weak. The lack of profit and loss sharing (PLS) financing is an important problem affecting Islamic banks in Lebanon. The main objective of this research is to explain if the financial instrument adopted by Islamic banks affect the legitimacy of the Islamic banks in Lebanon and to analyze problems faced by Islamic banks in Lebanon to use the PLS contract. The type of PLS contract raises a set of issues concerning the contractual relations between the Islamic bank and the clients. These issues may be addressed from the perspectives of Agency Theory, as we will do in this paper. This research find that the Islamic Bank cannot survive if it is not able to obtain its legitimacy and acceptability in the society that vis-à-vis its clients, especially those who invest in the bank for religious reasons.

Keywords:

Islamic Banking, Profit-and-Loss Sharing, Agency Theory, Legitimacy, Ethic, Religious, Lebanon

How to Cite:

Racha Mohamad Arab Ghayad and Mohamad Hamdan. The Legitimacy and the Success of the Islamic banks in Lebanon. [ref]: vol.21.2023. available at: https://refpress.org/ref-vol21-a120/