Risk Management for Islamic Banks

Salem, Rania

doi:10.1515/9780748670093

Cited by 10 publications

(8 citation statements)

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“…In addition, since no default interest is applied, other coercive mechanisms for the borrower to fulfill its obligations (non-financial penalties) are more important in Islamic banks. (Salem, 2013).…”

Section: Credit Risk Mitigation Methodsmentioning

confidence: 99%

“…The biggest challenges for Islamic banks are the fact that Islamic banking products include different types of risks at one and the same time, the transactions on the basis of profit-loss sharing create new risks unique to them, and the extra transparency required by these institutions. In addition, the fact that some hedging methods used by conventional banks are prohibited by Islamic law principles is another complication for Islamic banks (Salem, 2013). In this regard, there is a need to develop new and unique risk management instruments based on Islamic principles.…”

Section: Risk Management In Islamic (Participation) Banksmentioning

confidence: 99%

“…Latter; the guarantee and penal sanctions to be applied in case of default are limited by the principles of Islamic law. Third, different risks are more intertwined in Islamic banking (Salem, 2013).…”

Section: Credit Risk Managementmentioning

confidence: 99%

“…In order to mitigate this risk in salam contracts, it is common practice for Islamic banks to enter a parallel salam contract, where a third party acquires goods of similar specifications to those determined in the first salam contract. Such an engagement mitigates commodity price risk on the bank's side since the third party should fulfill an immediate payment as stipulated by the contract (Salem, 2013).…”

Section: Commodity Price Riskmentioning

confidence: 99%

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İslami̇ Bankalarda Ri̇sk Yöneti̇mi̇: Türki̇ye'deki̇ Katilim Bankalari Üzeri̇nde Bi̇r Araştirma

PARLAKKAYA

Çetin

DEMİRCİ

2022

Mehmet Akif Ersoy Üniversitesi İktisadi Ve İdari Bilimler Fakültesi Dergisi

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Risk management is of strategic importance for banks whose operations are largely based on risky transactions. Islamic banks face almost all risks exposed in conventional banks. Risks are further diversified and complicated in Islamic banks. In this respect, risk management in these banks requires some unique risk measurement, risk mitigation and risk management systems. Also, Islamic banks cannot use some of the methods used by conventional banks in risk management. Therefore, there is a need for unique methods compliant with Shariah principles. In this paper, a detailed literature review has been conducted on studies investigating risk management in Islamic banks and the theoretical framework of the subject was established. Then, a qualitative research was conducted in order to identify the main risks encountered in Islamic (Participation) banks operating in Turkey. The risk management techniques of these banks were examined and compared with conventional banks. Also, main problems in risk management were determined and possible solutions were recommended in this context. Within the scope of the research, the data obtained by the interview method was interpreted by descriptive analysis method. According to results, risk management in Islamic banks is largely similar to conventional banks. On the other hand, different types of risks encountered in these banks and the obligation to comply with Islamic principles differentiate Islamic banks in the risk management process.

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Section: Credit Risk Mitigation Methodsmentioning

confidence: 99%

Section: Risk Management In Islamic (Participation) Banksmentioning

confidence: 99%

Section: Credit Risk Managementmentioning

confidence: 99%

Section: Commodity Price Riskmentioning

confidence: 99%

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İslami̇ Bankalarda Ri̇sk Yöneti̇mi̇: Türki̇ye'deki̇ Katilim Bankalari Üzeri̇nde Bi̇r Araştirma

PARLAKKAYA

Çetin

DEMİRCİ

2022

Mehmet Akif Ersoy Üniversitesi İktisadi Ve İdari Bilimler Fakültesi Dergisi

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“…Additionally, they review the implementation of the processes and then issue rulings (Fatwas) and answer queries. Moreover, the sharia supervisory board reviews contracts, documents and templates and approve them and provide sharia and awareness courses (Salem, Rania (2012).…”

Section: The Sharia Supervisory Boardmentioning

confidence: 99%

Ethical entrepreneurship: Islamic financial principles for Small and Medium Enterprises (SMEs)

Ali Keya Anami

2024

GSC Adv. Res. Rev.

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Islamic ethics prescribe its followers to zealously guard their behavior, words, thoughts, and intentions and observe certain norms and moral codes in their financial transactions; in their social affairs; and in private and public life. The unique feature of the Islamic ethical system is that it permeates all spheres and fields of human life. Islam therefore has its own distinctive value-based ethical system for finance dealings. It prescribes certain specific guidelines governing finance ethics, which are dictated primarily by the notion of halal (lawful or permitted) and haram (unlawful or prohibited) as per Islamic jurisprudence (fiqh). The current global economic meltdown is a clear revelation of the shortcomings of the conventional financial set-up and the weakness of self-designed system devoid of spiritual and divine guidance, hence the yearning and desire for a socially just financial system by conscious individuals and corporate bodies. The assertion that Islamic financial system is only distinguished from other economic systems in its emphasis on interest free and other usurious transactions coupled with the fact that many concepts are springing up contending with the Islamic financial system inform the need to study the system within the context of Islamic ethical principles. This paper is therefore out to articulate the ethical principles of financial institutions as enshrined in the Qur’an and the Sunnah of the Prophet so that Islamic financial system will not lose focus and to avoid being carried away by the flamboyant and excessive profits and surpluses of the conventional financial institutions.

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2015

Risk Management for Islamic Banks

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Risk Management for Islamic Banks

Cited by 10 publications

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İslami̇ Bankalarda Ri̇sk Yöneti̇mi̇: Türki̇ye'deki̇ Katilim Bankalari Üzeri̇nde Bi̇r Araştirma

İslami̇ Bankalarda Ri̇sk Yöneti̇mi̇: Türki̇ye'deki̇ Katilim Bankalari Üzeri̇nde Bi̇r Araştirma

Ethical entrepreneurship: Islamic financial principles for Small and Medium Enterprises (SMEs)

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