Risk Management In Mudharabah And Musharakah Financing Of Islamic Banks
AbstractThe low level participation of the Islamic banks in mudharabah and musharakah financing models has become one of the problems in the development of the industry. This arrangements are unique to Islamic banking and account for its superiority over conventional banking on grounds of ethics and efficiency, but the majority of Islamic banks have limited themselves to less risky trade-financing assets, which tend to be a shorter maturity. This paper tries to analyzes why Islamic banks are reluctant to indulge in mudharabah and musharakah financing. It introduces the theoretical model of balance sheet to compare them to the practices of Islamic banking. Then this paper analyze the reasons why Islamic banks tend to avoid such financing models. In the end it explore the risk management concept that might solve the problem.
Download InfoIf you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
Bibliographic InfoPaper provided by Department of Management and Business, Padjadjaran University in its series Working Papers in Business, Management and Finance with number 201013.
Length: 31 pages
Date of creation: Nov 2010
Date of revision: Nov 2010
Islamic banks; profit and loss sharing arrangements; risk management;
Find related papers by JEL classification:
- G0 - Financial Economics - - General
This paper has been announced in the following NEP Reports:
- NEP-ALL-2010-12-04 (All new papers)
- NEP-ARA-2010-12-04 (MENA - Middle East & North Africa)
- NEP-RMG-2010-12-04 (Risk Management)
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Park, Sangkyun, 1997. "Risk-taking behavior of banks under regulation," Journal of Banking & Finance, Elsevier, vol. 21(4), pages 491-507, April.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Aldrin Herwany).
If references are entirely missing, you can add them using this form.