For example, the BOJ’s estimate on the output gap for the recent April-June period is negative 0.7 percent and is smaller than that of the Cabinet Office of negative 1.6 percent. This implies that the output gap estimates must be interpreted with wide margins.
Mudaraba/Musharaka contracts transform the Islamic banks’ deposits into essentially a fund management product (although currently most regulators recognize these as equivalent to conventional deposit contracts) and this impacts the corresponding asset portfolio. There is a need therefore that Islamic banks acquire assets on a PLS basis as well and eventually move beyond fixed return products, like Murabaha and Ijara.