Due to adverse selection AND moral hazard problems associated to finance CONTRACTS in conventioal banking AND Islamic banking, Use of signalling effects, variables of constitute of financial CONTRACTS can be a great help to offset the above issues is have. collateral AND interest rate has been considered as the most important of components the agreement in conventional banking financial CONTRACTS, AND with determination AND adjust them, efficiency the contract has improved.So, In this research it has been tried to develop the social aspects of CONTRACTS by considering the Islamic ethics values such as; honesty, trustworthy AND so on which are effective undertaker behaviour in addition to economic aspect by taking into account the Islamic banking issues in PROFIT - LOSS SHARING CONTRACTS AND conventional banking expriments to increase finnacial contract effieancy.The point is also due to the specific characteristics of PROFIT - LOSS SHARING CONTRACTS, specially, the effect potential signalling of component ’PROFIT share ratio’ in the contract could be used AND adverse selection, AND moral hazard problems be minimized.

Islamic banks AND financial institutions established based on "PROFIT AND LOSS SHARING" theory four decades ago. While this theory provides increasing in investment AND develops bank loans distribution but it has its own challenges AND problems in practice. These challenges are: separating Islamic banks interest rates from international interest rates, determining definite PROFIT rate for investment, moral hazard for loan demANDers, delay in returning debts, lack of proper ways of government financing AND lack of institutional infrastructures. In this paper, it is suggested the effect of PROFIT AND LOSS SHARING theory on investment AND the development of facilitate distribution, challenges in front of Islamic banking system AND their possible solutions.

This paper presents an explanation for why PROFIT AND LOSS SHARING banking not successful. PROFIT AND LOSS SHARING banking is an idea called non-interest banking or Islamic banking. Although extensive studies have been conducted on it for more than 5 decades AND many banks have been established AND operated under the name of Islamic Bank or similar, this method still faces major challenges. For this method of banking, many problems have been stated. Due to these problems, most of the Islamic banks have tried to use other CONTRACTS AND leave the PROFIT AND LOSS SHARING. But no theoretical explanation has been provided for this replacement. The purpose of this article is to provide a causal explanation for the non-development of this idea. The method of theoretical explanation is based on the basics of logic by presenting it in a diagrammatic AND graphical way. The result is that based on rationality, the preferences of banks AND beneficiaries of PROFIT AND LOSS SHARING CONTRACTS in all cases, at least for one party, create less benefits than CONTRACTS with fixed interest, AND this is the main factor for avoiding these CONTRACTS AND moving towards fixed PROFIT CONTRACTS. Nevertheless, if religious faith causes people to accept non-usurious CONTRACTS with a higher percentage of cost, then also in this case believers prefer non-usurious (not cooperative) CONTRACTS.

PROFIT AND LOSS SHARING (PLS) is one of the economic issues that was in force since the inception of Islamic jurisprudence. The early Shia jurists from Sheikh Saduq to Shahid Awwal (Muhammad Jamaluddin al-Makki al-Amili al-Jizzini) AND to Imam Khomeini have discussed PROFIT AND LOSS SHARING in their books that are now used as the first reference books on PLS. In this descriptive-analytical research, which has been developed based on library studies, we intend to clarify the fact that PROFIT AND LOSS SHARING is a social necessity which accelerates fixed AND cash capital turnover. The Islamic society feels the need to PLS charging more than before to comply with the prohibition of interest – that goes counter to religious code of conduct. This paper intends to review some of Imam Khomeini’ s jurisprudential discussions on monetary policies. Since Imam Khomeini, along with other jurists, have directly discussed the PROFIT AND LOSS SHARING mechanism, we have directly taken these discussions from his other jurisprudential works. Therefore, some viewpoints AND understANDings may not be a hundred percent certain AND may cause skepticism AND conjecture. It is hoped that this paper will be an introduction to more research works by the researchers AND academicians for clarification of these urgent financial matters on the part of the universities AND theological schools in order to reach resolute decrees on these issues.

Meanwhile a discussion about business cycles, in this paper, by separating money market into two markets of “saving- deposits” AND “investment-credit”, we study the time structure of depositors-bank-investors behavior AND will conclude that the structure of prevailing banking causes oscillations in money market AND interest rates. These oscillations will affect the real sector through deposits AND investment AND makes economic fluctuation.Mathematically, it is shown that the banking structure is of the most important factors for creation of economic cycles. Accordingly, deletion of usury as a solution for connecting investment to deposit directly through Rastin PROFIT AND LOSS SHARING (PLS) banking system is proposed. In this system, the bank provides investment management services AND get wage. In Rastin PLS banking, practically risks are transferred from financing sector to depositor AND the bank will not face LOSSes. On the other side, structural AND powerful linkage between the interest rate of credit facilities AND rate of interest of deposits does not allow LOSSes in credit market AND only PROFIT in deposit market. This is contrary to conventional banking system whereas if even the investor or credit receiver makes either PROFIT or LOSS the depositor earns PROFIT.The other sides of pathology of economic crises are due to excessive consumption, economic over-thirst (human indefinite desire), greed, squANDering, waste AND similar topics that widen the domain of crises.Adjusting the human behaviors as is taught in mystical AND ethic educations mentioned in Islam AND other divine religions have an important role for practical reduction of crises tensions. Reducing waste will contribute to release of a big share of resources in economy AND result to attenuate the domain of the wave of business cycles AND relatively will make the economy more stable.

From the perspective of civil jurisprudence, the trustee is not liable for any damages unless in case of excessive use or failure of due care. However, a question arises whether a trustee may be liable, by inserting a condition, even in the absence of excessive use or failure of due care? This is a controversial precedented issue in the Islamic jurisprudence AND the aspect which makes it up-to-date is its analysis in “ banking PROFIT AND LOSS SHARING CONTRACTS including Mudarabah” . The vast majority of Shiite AND Sunni jurists consider the stipulation of the trustee’ s liability in the form of a “ corollary condition” as “ null AND void AND invalidating” due to its being against the requirements of contract AND its contradiction with the requirements of trust, ownership AND representation of Mudarabah. The few jurists, under whose fatwa liability in the form of condition about performance is valid, consider this condition as a promise which merely creates a “ pure imperative rule” AND is not capable of creating “ the positive rule of liability” . It appears that the evidence of those who consider this condition as valid are not convincing AND the evidence of opponents such as the absoluteness of “ Sahiha of Mohammad ibn Ghais” which declares the stipulation of merchant’ s liability as the cause of the “ transformation of Mudaraba nature” into usurious loan, are preferable. Although the Iranian legislator has also accepted this opinion in article 558 of the Civil Code, article 12 of the Executive Directive of Usury-Free Banking Act passed in 1984, has permitted the trustee's liability which needs amendment. This research is based on a descriptive-analytical method AND the use of documentary collection tools. The main approach of this paper is jurisprudential; however, given the need to analyze the relevant Iranian laws, the issue has been studied from a legal perspective as well.

This article is an extension of the Eslamloueyan (2015). One of the key findings of that research is that the PROFIT doesn't need to belong to only one production factor, but other inputs can also share in the PROFIT. In addition, the economic principle that those who bear the risks are entitled to PROFIT does not contradict Islamic viewpoints. Using a simple model, we compare the distribution system based on fixed payment to the PROFIT-LOSS SHARING system under uncertainty. Additionally, our framework allows us to examine Ayatollah Sadr's theory regarding the share of the Mamluk material owner in production. We argue that there is no difference between the fixed payments AND the PROFIT-LOSS SHARING methods to compensate the services of production factors in the equilibrium under the certainty case. However, when there is uncertainty, our results suggest that replacing the fixed payment system with a PROFIT-LOSS SHARING system is more compatible with distributive justice AND better maintains human dignity. Hence, to better compensate for the services of different factors of production, governments should take specific measures to promote a PROFIT-LOSS-SHARING system. Our findings might be used to develop a theory of PROFIT for an economic system with an Islamic perspective.

The method of PROFIT AND LOSS SHARING in the civil partnership agreement is one of the existing challenges of the banking system. Article 11 of the civil partnership agreement of the Central Bank denotes that, the partner is obliged to pay the expressed interest even if it is not realized. Using a content analysis method, this paper analyzes the relevant jurisprudential views to determine the requirements of the partnership agreement. Many jurists believe that this type of PROFIT AND LOSS SHARING is faced with jurisprudential problems, including opposition to the requirements of the contract. Another group of researchers believe that this type of agreement changes the nature of the civil partnership agreement AND deprives the traders to the actual uses of the contract,whether stipulated in a partnership agreement or in an independent agreement,since the conventional wisdom or received opinion of real participation in PROFITs AND LOSSes is a prerequisite for a company contract. In their view, since this effect is the result of the creation of a contract, its removal by an implicit condition or a necessary external contract makes it void AND useless.