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Islamic Banking: An Appraisal of Insolvency Hazard

Author

Listed:
  • Muhammad Asif Khan

    () (University of Azad Jammu & Kashmir)

  • Waheed Akhtar

    (University of Azad Jammu & Kashmir)

  • Assad Ullah

    (University of Azad Jammu & Kashmir)

  • Zafar Iqbal

    (University of Azad Jammu & Kashmir)

  • Irfan Riasat

    (University of Azad Jammu & Kashmir)

Abstract

The literature reveals that most of the comparative studies have been conducted in the field of conventional versus Islamic banks while as much focus has not been paid to analyze comparative performance of Islamic banks across the countries and literature is scant in this area. This study appraises and analyses comparatively the riskiness and solvency of selected Malaysian and Pakistani Islamic banks during 2006 to 2011. Data have been obtained from secondary sources of annual audited financial reports of various banks under stud that has been analyzed through mean, standard deviation, coefficient of variation and t-test. The empirical findings demonstrate that solvency has gradually condensed and Malaysian Islamic banks are more vulnerable to financial risk as financial leverage has moved upward. The Malaysian Islamic banks (MIB) have fairly attracted deposits compared to Pakistani Islamic banks (PIB), resultantly they are more exposed to default risk. It is concluded that Malaysian Islamic banks are more risky and less solvent compared to Pakistani Islamic banks which are less risky and more solvent. The study is a valuable addition to literature and it signals policy makers devise policies to remain productive.

Suggested Citation

  • Muhammad Asif Khan & Waheed Akhtar & Assad Ullah & Zafar Iqbal & Irfan Riasat, 2013. "Islamic Banking: An Appraisal of Insolvency Hazard," 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. 3(4), pages 1-10, October.
  • Handle: RePEc:hur:ijaraf:v:3:y:2013:i:4:p:1-10
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    Citations

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    Cited by:

    1. Waeibrorheem Waemustafa & Suriani Sukri, 2015. "Bank Specific and Macroeconomics Dynamic Determinants of Credit Risk in Islamic Banks and Conventional Banks," International Journal of Economics and Financial Issues, Econjournals, vol. 5(2), pages 476-481.
    2. Sasho Kozuharov & Jana Ilieva & Natasha Ristovska, 2017. "Islamic Banking and its Perspectives," 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. 7(2), pages 167-177, February.

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