Developments in Risk Management in Islamic Finance: A Review

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ID: 83702
2019
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Abstract
The purpose of this study is to review recent developments pertaining to risk management in Islamic banking and finance literature. The study explores the fundamental features of risks associated with Islamic banks (IBs) as compared to those associated with conventional banks (CBs) in order to determine the extent to which IBs engage in effective risk mitigation. The study includes a consideration of the major studies in which the fundamental features of Islamic banks and finance (IBF) and the main characteristics of risk management in IBs are analyzed in comparison with those of CBs. Specifically, these two kinds of banks are compared in relation to the types of risks faced, the characteristics of those risks, and the nature and extent of exposure to those risks. A tabular methodology approach is used in concert with a comparative literature review approach for the analysis. The results show that there is weak support for Shariah-based product development due to the lack of risk mitigation expertise in IBs. The conclusion presented is that in comparison with CBs, IBs are more risk-sensitive due to the nature of their products, contract structure, legal costing, governance practices, and liquidity infrastructure. Furthermore, the determinants of the credit risk of Islamic banks in Malaysia (MIBs) are examined. Overall, bank capital and financing expansion have a significant negative impact on the credit risk level of IBs in Malaysia.
Reference Key
rahahleh2019developmentsjournal Use this key to autocite in the manuscript while using SciMatic Manuscript Manager or Thesis Manager
Authors Rahahleh, Naseem Al;Bhatti, M. Ishaq;Misman, Faridah Najuna;
Journal journal of risk and financial management
Year 2019
DOI
DOI not found
URL
https://www.mdpi.com/1911-8074/12/1/37
Keywords
environmental effects of industries and plants renewable energy sources environmental sciences finance islam. bahai faith. theosophy, etc. risk in industry. risk management accounting. bookkeeping islamic law

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