Islamic bank financing is considered asset-based financing rather than conventional banking. Asset-linked financing and Islamic principles make Islamic banking closer to the real economy than the paper-based economy. This paper aims to explore the patterns of financed assets and Islamic financing contracts in the context of selected Islamic banks in Pakistan, Malaysia and the Maldives.
This study used a case study research approach, focusing on 14 selected Islamic banks in three jurisdictions. The primary source of data for this research was the analysis of information gathered from the websites and annual reports of these selected banks.
The study finds that Islamic banks in Pakistan, Malaysia and the Maldives primarily finance long-term assets through Diminishing Musharakah and Ijarah, while short-term and working-capital needs are largely met through sale-based contracts such as Murabahah and Musawamah. Partnership-based modes, including Musharakah and Mudarabah, are used selectively and mainly for corporate clients, reflecting cautious risk-sharing practices. Cross-country differences show greater contractual diversity in Malaysia, stronger use of Running Musharakah in Pakistan and application of Service Ijarah (Ijaratul- Ashkhaas) in the Maldives.
This study is significant as it enriches the literature on Islamic banking by analyzing financed asset patterns and Islamic financing contracts. It also holds practical importance by helping those unfamiliar with Islamic banking better understand its distinctions from conventional banking, while dispelling misconceptions and emphasizing its alignment with the real economy.
