Journal ArticleDOI
How ‘Islamic’ is Islamic Banking?
TLDR
In this article, a preliminary investigation shows that there remain substantial divergences between IBF's ideals and its practices, and much of IBF still remains functionally indistinguishable from conventional banking.Abstract:
Islamic Banks hold well over US $700 billion in assets and are growing at over 15% p.a. Islamic Banking and Finance (IBF) involves wider ethical and moral issues than simply ‘interest-free’ transactions. Its advocates argue that these make it more economically efficient than conventional banking and promote greater economic equity and justice. To what extent, then, do actual Islamic Banking practices live up to the ideal, and how different are they from conventional banking? A preliminary investigation shows that, three decades after its introduction, there remain substantial divergences between IBF's ideals and its practices, and much of IBF still remains functionally indistinguishable from conventional banking. This runs counter to claims by IBF advocates that it would rapidly differentiate itself from conventional banking. However, despite not providing an alternative to conventional banking and finance, IBF does strengthen a distinctly Islamic identity by providing the appropriate Islamic terminology for de facto conventional financial transactions.read more
Citations
More filters
Journal ArticleDOI
Islamic vs. conventional banking: Business model, efficiency and stability
TL;DR: In this paper, the authors compared conventional and Islamic banks and found no significant differences in business orientation, efficiency, asset quality, or stability, and found that conventional banks that operate in countries with a higher market share of Islamic banks are more cost-effective but less stable.
Journal ArticleDOI
A Comparison of Performance of Islamic and Conventional Banks 2004 to 2009
TL;DR: In this paper, the authors compared the efficiency of Islamic and conventional banks during the period 2004-2009 using data envelopment analysis (DEA) and meta-frontier analysis (MFA), and found that Islamic banks are typically on a par with conventional ones in terms of gross efficiency, significantly higher on net efficiency and significantly lower on type efficiency.
Journal ArticleDOI
The governance, risk-taking, and performance of Islamic banks
TL;DR: In this paper, the authors examined whether the difference in governance structures influenced the risk taking and performance of Islamic banks compared to conventional banks and concluded that the governance structure in Islamic banks plays a crucial role in risk taking as well as financial performance that is distinct from conventional banks.
Journal ArticleDOI
A comparison of performance of Islamic and conventional banks 2004 to 2009
TL;DR: In this paper, the authors compared the efficiency of Islamic and conventional banks during the period 2004-2009 using data envelopment analysis (DEA) and meta-frontier analysis (MFA).
Journal ArticleDOI
Of Religion and Redemption: Evidence from Default on Islamic Loans
TL;DR: In this article, the authors compare default rates on conventional and Islamic loans using a comprehensive monthly dataset from Pakistan that follows more than 150,000 loans over the period 2006:04 to 2008:12.
References
More filters
Posted ContentDOI
Credit Rationing in Markets with Imperfect Information.
Joseph E. Stiglitz,Andrew Weiss +1 more
TL;DR: In this paper, a model is developed to provide the first theoretical justification for true credit rationing in a loan market, where the amount of the loan and amount of collateral demanded affect the behavior and distribution of borrowers, and interest rates serve as screening devices for evaluating risk.
Journal ArticleDOI
Optimal Contracts and Competitive Markets with Costly State Verification
TL;DR: In this article, the authors focus on avoidable moral hazard and offer one explanation for limited insurance markets, for closely held firms, and for seemingly simple as opposed to contingent forms of debt.
Book
The Economics of Money, Banking and Financial Markets
TL;DR: In this article, the authors present an overview of the financial system and financial markets, including monetary theory, monetary policy, and financial institutions. But they do not discuss the role of monetary policy in financial markets.
Book
Islamic Finance: Law, Economics, and Practice
TL;DR: In this paper, the authors present a review of the major prohibitions of shari'a arbitrage in Islamic finance, including Riba and Gharar, and Derivative-like sales: Salam, Istisma, and Urbun.
Journal ArticleDOI
Costly Monitoring, Loan Contracts, and Equilibrium Credit Rationing
TL;DR: This paper developed a model with asymmetrically informed agents and costly monitoring of loan contracts, where an equilibrium can exhibit credit rationing, and the aggregate quantity of loans and equilibrium interest rates respond differently depending on whether there is rationing in equilibrium.