This study is intended to explain the practice of determining margin of financing conducted by Islamic banking in Indonesia and Brunei Darussalam and to analyse whether such a practice is in compliance with Islamic law. The debtors of Islamic banking, especially Muslims, have to be cautious and understand the products offered by Islamic banking. This study applied qualitative method which is aimed to construct propositions and explain the meaning behind the social phenomenon taking place. The data analysis not only was conducted in linear means, but also used interactive analysis. In the policy of determining margin, sharia will take into account the country’s economy condition, the risk management of financing, and the market share. In the process of determining the margin, sharia bank applies annuity method. Such a system still refers to the system of conventional banks, therefore it is evident that sharia banks cannot pull themselves apart from conventional bank system (in Indonesia) and the sharia banks in Brunei Darussalam have considered cost and margin in accordance with Islamic law. In Indonesian context, the acknowledgement of murabaha receivables is based on principal added by profit margin. Meanwhile, in Brunei Darussalam, only the principal is acknowledged by ba'i-bithaman-ajil (henceforth BBA) receivables. Indonesian Islamic banking is supposed to consider the circumstances of the customers, in compliance with Nazilah Almaisyarah, taking into account a person’s circumstances and it is belongs to the worship factor. In calculating margin, Islamic banking should calculate it daily by using flat rate.
Keywords: Determining Margin, Financing, Islamic Banking
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