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Analysis of Short-Term Asset Concentration in Islamic Banking

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  • Mirakhor, Abbas

Abstract

In general the process of implementation of Islamic banking in the Islamic Republic of Iran and Pakistan appears to be proceeding with relative success. However, number of problems have surfaced during the transition period, among which is a tendency for short-term assets to dominate commercial bank portfolios. The negative effects on capital formation is one result of this portfolio behavior. The cause of this behavior is a set of regulations constraining profit-sharing activities of commercial banks. It is shown here that such regulations rather than reducing the risks of bankruptcies in the banking system may well increase them.

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Bibliographic Info

Paper provided by University Library of Munich, Germany in its series MPRA Paper with number 56029.

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Date of creation: 1987
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Publication status: Published in IMF Working Paper 87.67(1987): pp. 1-28
Handle: RePEc:pra:mprapa:56029

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Keywords: Islamic banking; short-term assets; profit-sharing;

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  1. Michaelsen, Jacob B. & Goshay, Robert C., 1967. "Portfolio Selection in Financial Intermediaries: A New Approach," Journal of Financial and Quantitative Analysis, Cambridge University Press, Cambridge University Press, vol. 2(02), pages 166-199, June.
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  16. Bashir, B. A., 1983. "Portfolio management of islamic banks : `Certainty model'," Journal of Banking & Finance, Elsevier, Elsevier, vol. 7(3), pages 339-354, September.
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Cited by:
  1. Giorgio Gomel & Angelo Cicogna & Domenico De Falco & Marco Valerio Della Penna & Lorenzo Di Bona De Sarzana & Angela Di Maria & Patrizia Di Natale & Alessandra Freni & Sergio Masciantonio & Giacomo Od, 2010. "Islamic finance and conventional financial systems. Market trends, supervisory perspectives and implications for central banking activity," Questioni di Economia e Finanza (Occasional Papers) 73, Bank of Italy, Economic Research and International Relations Area.

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