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Risk management practices of Islamic banks of Brunei Darussalam

Author

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  • Abul Hassan

Abstract

Purpose - The objective of this paper is to assess the degree to which Islamic banks in Brunei Darussalam use risk management practices (RMPs) and techniques in dealing with different types of risk. Design/methodology/approach - The researcher developed a questionnaire which covers six aspects in the first part: understanding risk and risk management, risk assessment and analysis (RAA), risk identification (RI), risk monitoring, credit risk analysis and RMPs. The second part consists of two questions based on an ordinal scale dealing with two topics: methods of RI and risk facing the sample banks. Findings - This study found that that the three most important types of risk that the Islamic banks in Brunei Darussalam facing are foreign-exchange risk, followed by credit risk and then operating risk. It also found that the Islamic banks are somewhat reasonably efficient in managing risk where RI and RAA are the most influencing variables in RMPs. Research limitations/implications - The paper's findings are limited to the RMPs of Islamic banks in Brunei Darussalam. Originality/value - The paper explores the RMPs of the Islamic banks in Brunei Darussalam. The results can be used as a valuable feed back for improvement of RMPs in the Islamic banks in Brunei and will be of value to those people who are interested in the Islamic banking system.

Suggested Citation

  • Abul Hassan, 2009. "Risk management practices of Islamic banks of Brunei Darussalam," Journal of Risk Finance, Emerald Group Publishing, vol. 10(1), pages 23-37, January.
  • Handle: RePEc:eme:jrfpps:v:10:y:2009:i:1:p:23-37
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    Citations

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    Cited by:

    1. Asha Singh, 2015. "Effect of Credit Risk Management on Private and Public Sector Banks in India," International Journal of Academic Research in Business and Social Sciences, Human Resource Management Academic Research Society, International Journal of Academic Research in Business and Social Sciences, vol. 5(1), pages 97-106, January.
    2. Rajeshwar Sirpal, 2009. "Methods of payment and foreign-exchange risk management among firms in Brunei Darussalam," Journal of Risk Finance, Emerald Group Publishing, vol. 10(4), pages 377-392, August.
    3. Mohamed Ali Trabelsi, 2011. "The impact of the financial crisis on the global economy: can the Islamic financial system help?," Journal of Risk Finance, Emerald Group Publishing, vol. 12(1), pages 15-25, January.
    4. Monki Rim Ben Selma & Echchabi Abdelghani & Mohamed Taher Rajhi, 2013. "Risk Management Tools Practiced In Tunisian Commercial Banks," Studies in Business and Economics, Lucian Blaga University of Sibiu, Faculty of Economic Sciences, vol. 8(1), pages 55-78, April.
    5. Rashidah Abdul Rahman & Siti Balqis Noor & Tariq Ismail, 2013. "Governance and Risk Management: Empirical Evidence from Malaysia and Egypt," International Journal of Finance & Banking Studies, Society for the Study of Business & Finance, vol. 2(3), pages 21-33, July.
    6. Girish Karunakaran Nair & Harsh Purohit & Nidhi Choudhary, 2014. "Influence of Risk Management on Performance: An Empirical Study of International Islamic Bank," International Journal of Economics and Financial Issues, Econjournals, vol. 4(3), pages 549-563.
    7. Shehriyar Khalil & Liaqat Ali, 2015. "Risk Management Practices in the Conventional Banks Working in Peshawar," International Journal of Academic Research in Accounting, Finance and Management Sciences, Human Resource Management Academic Research Society, International Journal of Academic Research in Accounting, Finance and Management Sciences, vol. 5(2), pages 53-58, April.

    More about this item

    Keywords

    Brunei; Finance; Banks; Islam; Risk management;

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