How will the Islamic bank to bear the loss? — An actuarial approach to evaluate the bank´s investment income by the case of abandoned housing project

In this paper, I developed an actuarial method in explaining the reason of the difficulties for the bank in bearing the loss due to the abandoned housing project. This tool can be extensively incorporated into determining the suitable profit / rental rates as it provides how tolerance the bank in bearing the loss in terms of the probability of profit or loss attained by the bank. This model suggested the less tenure invites the less probability of the bank in earning profit (i.e. present value of investment income is greater than amount of financing) towards such facility where as in order to release the bank´s burden towards such risk, the bank has the right to raise the profit / rental rate as shown that the greater rates reduce the probability of loss (i.e. present value of investment income is less than amount of financing) due to abandoned housing project.