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<journal-id journal-id-type="publisher">global-journal-of-management-and-business-research-c-finance</journal-id>
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<journal-title>Global Journal of Management and Business Research - C: Finance</journal-title>
</journal-title-group>
<issn publication-format="print">0975-5853</issn>
<issn publication-format="electronic">2249-4588</issn>
<publisher><publisher-name>Global Journals Publishing Group Incorporated</publisher-name></publisher>
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<article-id pub-id-type="publisher-id">56796</article-id>
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<article-title>Inside the Black Box of the Islamic financial decision: Designing a Paying for Performance contracts with Agency Problems, Incentives and asymmetry of information</article-title>
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<contrib-group>
<contrib contrib-type="author"><name><surname>Anas</surname><given-names>Elmelki</given-names></name><xref ref-type="aff" rid="aff1" />
</contrib>
<contrib contrib-type="author"><name><surname>Hejra</surname><given-names>Ben Salah Saidi</given-names></name></contrib>
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<aff id="aff1">TUNISIA, Gafsa University Tunisia</aff>
<pub-date publication-format="electronic" date-type="pub" iso-8601-date="2020-01-15">
<day>15</day>
<month>01</month>
<year>2020</year>
</pub-date>
<volume>20</volume>
<issue>C4</issue>
<fpage>55</fpage>
<lpage>76</lpage>
<abstract><p>From a theoretical point of view in the Islamic financial framework, trust is supposed to provide the economic glue that enables social financial cohesion and be the cornerstone of all transactions that need to be fair and equitable. The two parties involved in the contractual agreement must act with good intention in order to avoid exploitation in the exchange transaction and improve their mutual welfare. In fact, the contractor loves to his partner that which he loves for himself. Unfortunately, in practice this situation is not always true, because Islamic finance isn’t merely reserved to muslims and also among muslims there could be who isn’t behaving in accordance with the Islamic teaching all the time, and have different interests. This situation can get worse, especially in PLS contracting with risk sharing, when there’s a presence of asymmetry of information and non observability, which makes pareto-optimal risk sharing prevented, due to the lack of proper incentives and high monitoring costs not allowing suitable decisions taking.</p></abstract>
<kwd-group kwd-group-type="author-generated">
<kwd>islamic banking finance</kwd>
<kwd>asymmetry of information</kwd>
<kwd>optimal contract</kwd>
<kwd>mudarabah</kwd>
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<p>From a theoretical point of view in the Islamic financial framework, trust is supposed to provide the economic glue that enables social financial cohesion and be the cornerstone of all transactions that need to be fair and equitable. The two parties involved in the contractual agreement must act with good intention in order to avoid exploitation in the exchange transaction and improve their mutual welfare. In fact, the contractor loves to his partner that which he loves for himself.</p>
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