Accounting disclosure of Islamic financial instruments between the problem of understanding and the problem of commitment: Participation instruments as an example

Abstract

Islamic banks are currently exposed to the same risks and difficulties that international banks are exposed to, as they rely on the Murabaha method, which represents a large part of their activities, and thus they are close to the traditional model of traditional banking activities in this aspect. Therefore, in order for Islamic banks to keep pace with the progress made in global banks, they must diversify their uses and develop the liabilities side by shifting from deposits that can be withdrawn immediately to accounts with terms, which are linked to the terms of use and thus participate in the outcome of the activity, which made financial instruments play a prominent role in doing so. Therefore, Islamic banks work hard to develop the tools and products they use in order to keep pace with the financing and investment needs of their clients. This pursuit of development towards the ranks of global banks must be accompanied by development in accounting disclosure in terms of quantity, quality and timing of obtaining information. This is the reason behind our choice of this topic for which we chose the participation bonds as a model for the accounting disclosure process for it.