Journal ArticleDOI
Risk in Islamic Banking
TLDR
In this article, the authors investigated risk and stability features of Islamic banking using a sample of 553 banks from 24 countries between 1999 and 2009 and found that small Islamic banks that are leveraged or based in countries with predominantly Muslim populations have lower credit risk than conventional banks.Abstract:
This paper investigates risk and stability features of Islamic banking using a sample of 553 banks from 24 countries between 1999 and 2009. Small Islamic banks that are leveraged or based in countries with predominantly Muslim populations have lower credit risk than conventional banks. In terms of insolvency risk, small Islamic banks also appear more stable. Moreover, we find little evidence that Islamic banks charge rents to their customers for offering Sharia compliant financial products. Our results also show that loan quality of Islamic banks is less responsive to domestic interest rates compared to conventional banks.read more
Citations
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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
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.
Journal ArticleDOI
Sukuk vs. conventional bonds: A stock market perspective
TL;DR: In this paper, the authors investigate whether stock market investors react differently to the announcements of sukuk and conventional bond issues, and they find that the stock market is neutral to announcements of conventional bonds issues, but it reacts negatively to announcement of SUkuk issues.
Journal ArticleDOI
A contemporary survey of islamic banking literature
M. Kabir Hassan,Sirajo Aliyu +1 more
TL;DR: This article reviewed empirical studies on Islamic banking and concentrates on their main findings while highlighting future research directions, and discusses scholars' concerns that have led to a paradigm shift in the system and highlight practitioners' disquiet about recent practices.
Journal ArticleDOI
Islamic Banking and Finance: Recent Empirical Literature and Directions for Future Research
TL;DR: In this article, the authors examine the recent empirical literature in Islamic banking and finance, highlight the main findings and provide a guide for future research, concluding that there are no major differences between Islamic and conventional banks in terms of their efficiency, competition and risk features.
References
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Lack of Profit Loss Sharing in Islamic Banking:Management and Control Imbalances
Humayon A. Dar,John R. Presley +1 more
Abstract: An imbalance between management and control rights is attributed as a major cause of lack of Profit Loss Sharing (PLS) in the practice of Islamic finance. Given this dichotomy, the agency problem gets accentuated, which may put the PLS at a disadvantage vis-à-vis other modes of financing. However, there is no theoretical reason to believe that PLS is inherently inefficient. In certain circumstances, this in fact may serve some important economic function.
Journal ArticleDOI
Interest rates and bank risk-taking
TL;DR: In this article, the authors used approximately 18,000 annual observations on euro area banks over the period 2001-2008 and presented strong empirical evidence that low interest rates indeed increase bank risk-taking substantially.
Journal ArticleDOI
A Portfolio View of Banking with Interest and Noninterest Activities
TL;DR: The authors used a portfolio framework to evaluate the impact of increased noninterest income on equity market measures of return and risk of U.S. bank holding companies from 1997 to 2004 and found that the banks most reliant on activities that generate non-interest income do not earn higher average equity returns, but are much more risky as measured by return volatility (both total and idiosyncratic) and market betas.
Posted Content
Interest rates and bank risk-taking
TL;DR: In this paper, the authors used approximately 18,000 annual observations on euro area banks over the period 2001-2008 and presented strong empirical evidence that low interest rates indeed increase bank risk-taking substantially.
BookDOI
Deposit Insurance around the World: A Comprehensive Database
TL;DR: In this article, the Demirguc-Kunt and Sobaci (2001) cross-country deposit insurance database was updated and extended in several important dimensions, such as identifying both recent adopters and the ones that were not covered earlier due to a lack of data.