Discussion of Principle Agent Theory in Banks on behalf of Depositors in Banking Deposits

Islamic precepts influence the structure and activities of Islamic banks and prohibit them against the payment and receipt of a fixed or predetermined rate of interest. In these banks, such as Iranian banks, the interest-based banking system is replaced by profit-loss sharing system. In granting credits and receiving profit, they use participating contracts such a Joale, Hire-Purchase and participation, instead of loan contracts and in profit-payment to the depositor, used the principle-agent theory. But the theory, for it's unreal nature, is unbiased to the parties intention and is insufficient to regulate the banks and depositors relationship. Moreover, the theory have effects, that can not be applied in normal banking Policy.