Lack of Profit-and-Loss Sharing Contracts in Moroccan Islamic Banks: An Investigation During the Coronavirus Pandemic

Abstract

Purpose — The purpose of this paper is to examine the challenges and barriers to implementing profit-and-loss sharing (PLS) contracts in Moroccan Islamic banks (IBs).

Design/Methodology/Approach — The paper presents the results of exploratory qualitative research based on face-to-face interviews with local managers of Moroccan IBs in the Rabat–Casablanca region. The investigation was carried out in September 2020, during the Coronavirus (COVID-19) pandemic.

Findings — The findings reveal that various challenges, mainly institutional and operational, as well as the implications of the COVID-19 pandemic have been the main barriers to implementing PLS contracts in Moroccan IBs.

Originality/Value — The findings are supported by field research targeting the managers who are directly concerned with the commercialisation of PLS contracts. Moreover, the present paper discusses the subject within the Moroccan context, where Islamic banking is a relatively recent phenomenon.

Research Limitations/Implications — Given the limited number of IBs in Morocco and the COVID-19 lockdown measures, bank managers in the Rabat–Casablanca region were considered. Consequently, only 14 managers agreed to contribute to the present research. The findings depend on the experience of the respondents on the topic of the research; therefore, other factors and challenges may exist.

Practical Implications — The present paper may remind scholars and practitioners of the importance of PLS instruments, especially under the pressure of COVID-19. It is an attempt to explain the challenges faced by these agreements and to make some recommendations in the hope that they will see the light of day in the Moroccan market.