How the Special Investment Account in Islamic Banking Offers a Solution for Fixed Profit Rate in Today's Global Challenges
DOI:
https://doi.org/10.64268/jifes.v1i2.36Keywords:
Displaced Commercial Risk (DCR), Financial Stability, Fixed Profit Rate, Global Challenges, Islamic Banking, Profit-and-Loss Sharing, Special Investment Account (SIA), Systematic Literature ReviewAbstract
Background: Islamic banking emphasizes profit-and-loss sharing and prohibits interest (riba), with Special Investment Accounts (SIAs) serving as a key instrument for depositor participation in investment outcomes. However, the growing expectation of stable profit rates and competitive market pressures pose significant challenges to the original spirit of risk-sharing in SIAs.
Aims: This study investigates how SIAs provide a structural solution to the perception of fixed profit rates in contemporary global economic uncertainties. It also examines the phenomenon of Displaced Commercial Risk (DCR), regulatory implications, and SIAs’ contribution to building a resilient and ethical financial system.
Methods: A qualitative, descriptive design was adopted, utilizing a systematic literature review and thematic analysis of scholarly works published between 2007 and 2024. Sources included peer-reviewed journals, regulatory reports, and thematic studies addressing SIAs, profit distribution, and financial stability.
Results: Findings reveal that although SIAs are theoretically grounded in risk-sharing, market competition often drives banks toward yield smoothing, creating a perception of fixed returns. Despite these challenges, SIAs maintain a vital link between finance and real economic activity, thereby enhancing systemic stability and offering an ethical alternative to conventional interest-based systems
Conclusion: SIAs represent more than an operational tool of Islamic finance; they embody an innovative, Shariah-compliant mechanism capable of structurally addressing systemic vulnerabilities in global finance. By fostering equitable risk-sharing, SIAs reduce exposure to excessive leverage and speculative crises, thus contributing to financial resilience. For Islamic banks, transparent communication about profit variability and judicious use of reserves are crucial to balancing competitiveness with Shariah integrity. Regulators, in turn, must develop harmonized frameworks that clearly differentiate SIAs from conventional deposits and address DCR as a structural tension rather than a mere regulatory anomaly. Overall, this research positions SIAs as a transformative model that not only strengthens the credibility of Islamic finance but also offers broader lessons for fostering ethical, stable, and sustainable financial systems worldwide
References
Ahmad, F., Rashid, A., & Shah, A. (2025). Monetary policy, financial development and firm investment in Pakistan: An empirical analysis. Journal of Economic and Administrative Sciences, 41(2), 592–614. https://doi.org/10.1108/JEAS-04-2022-0098 DOI: https://doi.org/10.1108/JEAS-04-2022-0098
Amuda, Y. J., & Al-Nasser, S. A. (2024). Exploring encounters and prodigies of Islamic banks in non-Muslim states: Towards enhancing regulatory frameworks of Islamic banking system. https://www.emerald.com/insight/content/doi/10.1108/ijlma-11-2023-0250/full/html. https://doi.org/10.1108/IJLMA-11-2023-0250 DOI: https://doi.org/10.1108/IJLMA-11-2023-0250
Bavoso, V. (2021). Market-Based Finance, Debt and Systemic Risk: A Critique of the EU Capital Markets Union. Accounting, Economics, and Law: A Convivium, 11(3), 20170039. https://doi.org/10.1515/ael-2017-0039 DOI: https://doi.org/10.1515/ael-2017-0039
Cash, P., Isaksson, O., Maier, A., & Summers, J. (2022). Sampling in design research: Eight key considerations. 78, 101077. https://doi.org/10.1016/j.destud.2021.101077 DOI: https://doi.org/10.1016/j.destud.2021.101077
Chupina, Zh. S., Shmanev, S. V., Morkovkin, D. E., Artamonova, K. A., Kerimova, Ch. V., & Gavel, O. Yu. (2025). Estimation of initial financial and economic parameters of an investment project for mining companies. Ugol, 3, 92–100. https://doi.org/10.18796/0041-5790-2025-3-92-100
De Simone, L., & Olbert, M. (2022). Real effects of private country-by-country disclosure. 97(6), 201–232. https://doi.org/10.2308/TAR-2020-0714 DOI: https://doi.org/10.2308/TAR-2020-0714
Debrah, C., Darko, A., & Chan, A. P. C. (2023). A bibliometric-qualitative literature review of green finance gap and future research directions. Climate and Development, 15(5), 432–455. https://doi.org/10.1080/17565529.2022.2095331 DOI: https://doi.org/10.1080/17565529.2022.2095331
El-Halaby, S., Aboul-Dahab, S., & Bin Qoud, N. (2021). A systematic literature review on AAOIFI standards. Journal of Financial Reporting and Accohttps://doi.org/10.1108/JFRA-06-2020-0170 DOI: https://doi.org/10.1108/JFRA-06-2020-0170
Fadhilah, N., & Tohirin, A. (2021). Comparing the return on mudharabah deposit and the return on equity: Assessing the fairness in Indonesian Islamic banking industry. Mutanaqishah: Journal of Islamic Banking, 1(1), 1–20. https://doi.org/10.54045/mutanaqishah.v1i1.1 DOI: https://doi.org/10.54045/mutanaqishah.v1i1.289
Fahamsyah, M. H., Laila, N., Rakhmat, A. S., & Shabbir, M. S. (2023). Profi t-Loss Sharing in Islamic Banking: Global Insights from a Systematic Review. 14(2), 175–203. https://doi.org/10.21580/economica.2023.14.2.26021 DOI: https://doi.org/10.21580/economica.2023.14.2.26021
Galych, O., Fedirets, O., Lytvynov, Y., Chopyk, O., Myronenko, V., & Kvita, H. (2025). FINANCIAL MANAGEMENT OF IT INNOVATIONS IN FOREIGN ECONOMIC MARKETING PROJECTS OF INVESTOR ENTERPRISES. Financial and Credit Activity: Problems of Theory and Practice, 4(63), 582–598. https://doi.org/10.55643/fcaptp.4.63.2025.4917 DOI: https://doi.org/10.55643/fcaptp.4.63.2025.4917
Harahap, B., Risfandy, T., & Futri, I. N. (2023). Islamic law, Islamic finance, and sustainable development goals: A systematic literature review. 15(8), 6626. https://doi.org/10.3390/su15086626 DOI: https://doi.org/10.3390/su15086626
Husain, A., Yii, K.-J., Fung, C. Y., & Busulwa, R. (2025). Portfolio risk of cryptocurrency inclusion: A comparison among conventional cryptocurrencies and asset-backed cryptocurrencies. Eurasian Economic Review, 15(3), 687–739. https://doi.org/10.1007/s40822-025-00320-3 DOI: https://doi.org/10.1007/s40822-025-00320-3
Islam, M. M., & Hasan, M. M. (2024). Islamic marketing of conventional banks: Bridging managers’ and clients’ perceived gaps. https://doi.org/10.1108/JIABR-11-2023-0379 DOI: https://doi.org/10.1108/JIABR-11-2023-0379
Jamal, A. A., & Motani, H. (2024). Islamic wealth management: Prospects, challenges, and the case of Singapore. 19(3), 260–279. https://doi.org/10.1093/cmlj/kmae008 DOI: https://doi.org/10.1093/cmlj/kmae008
Kang, J.-H., Huang, N.-J., Yang, B.-Z., & Hu, Z. (2025). Robust Equilibrium Strategy for Mean–Variance–Skewness Portfolio Selection Problem with Long Memory. Journal of Optimization Theory and Applications, 206(2). https://doi.org/10.1007/s10957-025-02697-2 DOI: https://doi.org/10.1007/s10957-025-02697-2
Lin, L., & He, Y. (2025). Place-based policies and gendered human capital formation: Evidence and mechanisms. China Economic Review, 92. https://doi.org/10.1016/j.chieco.2025.102446 DOI: https://doi.org/10.1016/j.chieco.2025.102446
Malik, A., Ullah, K., Jan, S., Atiq, M., & Abdullah, A. (2021). The role of knowledge diffusion in evolving governance principles for Islamic banking. International Journal of Islamic and Middle Eastern Finance and Management, 14(4), 835–850. https://doi.org/10.1108/IMEFM-07-2020-0325 DOI: https://doi.org/10.1108/IMEFM-07-2020-0325
Maulina, R., Dhewanto, W., & Faturohman, T. (2023). The integration of Islamic social and commercial finance (IISCF): Systematic literature review, bibliometric analysis, conceptual framework, and future research opportunities. 9(11). https://www.cell.com/heliyon/fulltext/S2405-8440(23)08820-5. https://doi.org/10.1016/j.heliyon.2023.e21612 DOI: https://doi.org/10.1016/j.heliyon.2023.e21612
Peters, L. E. (2021). Beyond disaster vulnerabilities: An empirical investigation of the causal pathways linking conflict to disaster risks. 55, 102092. https://doi.org/10.1016/j.ijdrr.2021.102092 DOI: https://doi.org/10.1016/j.ijdrr.2021.102092
Putra, R. D., & Padewa, H. (2025). Determinants of Micro-Entrepreneurial Income in Emerging Urban Tourism Spaces: An Islamic Economic Perspective from Metro City, Lampung. Journal of Islamic Finance and Economic Studies, 1(1), 1–8. https://doi.org/10.64268/jifes.v1i1.17 DOI: https://doi.org/10.64268/jifes.v1i1.17
Rejeb, A., Rejeb, K., & Zailani, S. (2024). Tracing knowledge diffusion flows in Islamic finance research: A main path analysis. https://doi.org/10.1108/JIABR-10-2023-0344 DOI: https://doi.org/10.1108/JIABR-10-2023-0344
Risfandy, T., & Hassan, M. K. (2025). Excess Remuneration, Governance, and Risk‐Taking in Islamic Banks. International Journal of Finance & Economics, ijfe.70022. https://doi.org/10.1002/ijfe.70022 DOI: https://doi.org/10.1002/ijfe.70022
Rouetbi, M., Ftiti, Z., & Omri, A. (2023). The impact of displaced commercial risk on the performance of Islamic banks. 79, 102022. https://doi.org/10.1016/j.pacfin.2023.102022 DOI: https://doi.org/10.1016/j.pacfin.2023.102022
Savai, A., Pjanic, M., Mitrasevic, M., & Milenkovic, N. (2025). Profitability determinants of cooperative Islamic insurance companies. E a M: Ekonomie a Management, 28(1), 170–188. https://doi.org/10.15240/tul/001/2025-1-011 DOI: https://doi.org/10.15240/tul/001/2025-1-011
Sulistyowati, L., Hamzah, M. Z., & Ratnawati, N. (2025). Macroeconomic and Price of Oil and Gold on Liabilities of Hajj Fund Management Agency. 7(2), 676–686. https://doi.org/10.34306/att.v7i2.533 DOI: https://doi.org/10.34306/att.v7i2.533
Tafese, T., Lay, J., & Tran, V. (2025). From fields to factories: Special economic zones, foreign direct investment, and labour markets in Vietnam. Journal of Development Economics, 174. https://doi.org/10.1016/j.jdeveco.2025.103467 DOI: https://doi.org/10.1016/j.jdeveco.2025.103467
Tanchangya, T., Sarker, T., Rahman, J., Islam, M. S., Islam, N., & Siddiqi, K. O. (2025). Mapping Blockchain Applications in FinTech: A Systematic Review of Eleven Key Domains. 16(9), 769. https://doi.org/10.3390/info16090769 DOI: https://doi.org/10.3390/info16090769
Touri, O., Ahroum, R., & Achchab, B. (2024). Management and monitoring of the displaced commercial risk: A prescriptive approach. International Journal of Emerging Markets, 19(6), 1748–1765. https://doi.org/10.1108/IJOEM-07-2018-0407 DOI: https://doi.org/10.1108/IJOEM-07-2018-0407
Uluyol, B. (2023). A comprehensive empirical and theoretical literature survey of Islamic bonds (sukuk). Journal of Sustainable Finance & Investment, 13(3), 1277–1299. https://doi.org/10.1080/20430795.2021.1917224 DOI: https://doi.org/10.1080/20430795.2021.1917224
Volokhova, T., & Pilyugina, A. (2025). Economic and mathematical models in solving logistics problems of ensuring availability of banking services. AIP Conf. Proc., 3276(1). https://doi.org/10.1063/5.0262839 DOI: https://doi.org/10.1063/5.0262839
Wang, N., & Zhang, Y. (2025). Robust asset-liability management games in a stochastic market with stochastic cash flows under HARA utility. Insurance: Mathematics and Economics, 124. https://doi.org/10.1016/j.insmatheco.2025.103125 DOI: https://doi.org/10.1016/j.insmatheco.2025.103125
Wani, A. A. (2025). Comprehensive review of dimensionality reduction algorithms: Challenges, limitations, and innovative solutions. 11, e3025. https://doi.org/10.7717/peerj-cs.3025 DOI: https://doi.org/10.7717/peerj-cs.3025
Zakheos, M. (2022). The derivatives market and systemic risk–lessons learned from the global financial crisis, regulatory failures and the post-crisis reforms. Regulatory Failures and the Post-Crisis Reforms (August 3, 2022). https://papers.ssrn.com/sol3/papers.cfm?abstract_id=4246292. https://doi.org/10.2139/ssrn.4246292 DOI: https://doi.org/10.2139/ssrn.4246292
Zurian, O., Tolkunov, A., & Omelchenko, T. (2025). RISK CONSIDERATIONS IN THE STUDY OF INVESTMENT ATTRACTIVENESS OF GEOTHERMAL ENERGY OBJECTS. Visnyk of Taras Shevchenko National University of Kyiv. Geology, 2(109), 97–103. https://doi.org/10.17721/1728-2713.109.13 DOI: https://doi.org/10.17721/1728-2713.109.13