Abstract. Profit loss-sharing contracts (mudharabah and musyarakah) have higher financing risk than debt financing contract (murabahah). The purpose of this study is to develop a blockchain technology model as a mechanism to reduce financing risk in profit loss-sharing contracts in Indonesian Islamic banks. This is a conceptual paper with an integrative literature review related to the financing feasibility evaluation mechanism, financing risks, smart contracts, and blockchain technology. The results show that blockchain technology can reduce asymmetric information and financing risk in Islamic bank profit loss-sharing contracts because, in blockchain technology, there are smart contracts that can omit asymmetric information, and all stakeholders involved in the blockchain can access and monitor data and none of them can change the data.

Keywords: Profit loss sharing contract · Financing risk · Smart contract · Blockchain technology