ABSTRACT
This chapter attempts to analyze the existing pattern of financing of Islamic banking and thus depicts a new way of analyzing the syndrome of asset-based financing, particularly murabaha. It proposes a new conceptualization of the bank rent opportunities to be captured by Islamic banks – 'Islamic bank rent'. The chapter illustrates the conceptualization of Islamic bank rent by looking at the empirical evidence from the banking sector of Bangladesh as a sample. It also proposes a fairly new conceptualization of 'Islamic bank rent' which should be earned by Islamic banks to compensate the unique risk and/or cost of Islamic banking as compared to conventional banking. The chapter contributes to the expansion of the bank rent theory to the profit-and-loss modes of financing in Islamic banking. It concludes by raising several policy options for the regulators to design an appropriate regulatory framework for making Islamic banks as prudent financial intermediaries.
