Shaikh, Salman and Jalbani, Amanat (2008): Risk Management in Islamic and Conventional Banks: A Differential Analysis. Published in: Journal of Independent Studies and Research , Vol. 7, No. 2 (July 2009): pp. 67-79.
Download (183Kb) | Preview
Islamic banking is interest-free banking which makes it necessary for Islamic banks to take active part in the operations of the business, i.e. share profits as well as losses. Banks including Islamic banks prefer to take minimum risk. On the surface, it may seem that Islamic banks face more risk and hence, will have more volatile or even negative returns on their assets.
This paper analyzes the risk management procedures of Islamic banks by giving a differential analysis of risk management discussing only the unique characteristics of risk management in Islamic Banking. The usual credit assessment procedures and BASEL are not discussed. This paper looks at the comparative performance of Islamic banks and conventional banks by using ROE as the benchmark.
|Item Type:||MPRA Paper|
|Original Title:||Risk Management in Islamic and Conventional Banks: A Differential Analysis|
|Keywords:||Risk management, commercial banking, Islamic banking, price risk, Risk mitigation|
|Subjects:||G - Financial Economics > G3 - Corporate Finance and Governance > G32 - Financing Policy; Financial Risk and Risk Management; Capital and Ownership Structure; Value of Firms; Goodwill
G - Financial Economics > G2 - Financial Institutions and Services > G21 - Banks; Depository Institutions; Micro Finance Institutions; Mortgages
|Depositing User:||Salman Shaikh|
|Date Deposited:||22. Dec 2009 06:10|
|Last Modified:||12. Feb 2013 07:49|
Abdul-Rahman, Yahia (2006) ‘Islamic Instruments for Managing Liquidity’ International Journal of Islamic Financial Services Vol. 1 No.1
Cihak, Martin & Hesse, Heiko (2008) ‘Larger Islamic Banks Need Prudential Eye’ IMF Working Paper, European Department
Dar, Humayon A. & Presley, John R. (2006) ‘Islamic Finance: A Western Perspective’ International Journal of Islamic Financial Services Vol. 1 No.1
Fisher, I. (I933) ‘The Debt-Deflation Theory of Great Depressions’ Econometrica (I),337-357.
Ghamidi, Javed A. (2007) Meezan Lahore: Dar-ul-Ishraq
Kahef, Monzer (2006, April 22-23) ‘Innovation and Risk Management in Islamic Finance’ Paper prepared for the Seventh Harvard International Forum on Islamic Finance.
Kahef, Monzer (2005, November 22-24) ‘Basel II: Implications for Islamic Banking’ Paper written for the 6th International Conference on Islamic Economics and Banking, Jakarta.
Khan & Ahmed (2003) Risk Management in Islamic Banks: IRTI publication.
Khan, M. Fahim (2006) ‘Financial Modernization in 21st Century and Challenge for Islamic Banking’ International Journal of Islamic Financial Services Vol. 1 No.3
Luca Errico and Mitra Farahbaksh (1998) ‘Islamic Banking: issues in Prudential Regulation and Supervision’ IMF Working Paper No. WP/98/30.
Yudistira, Donsyah (2003) ‘Efficiency in Islamic Banking: an Empirical Analysis of 18 Banks’ Journalof Economic Literature
Samdani, Ijaz A. (2007) Islamic Banking and Gharar. Karachi, Idara-e-Islamiat
Sarker, M. A. A. (1999) I’slamic Banking in Bangladesh: Performance, Problems, and Prospects’ International Journal of Islamic Financial Services, 1.