Risk in Islamic Banking

Pejman Abedifar (), Philip Molyneux () and Amine Tarazi
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Pejman Abedifar: LAPE - Laboratoire d'Analyse et de Prospective Economique - GIO - Gouvernance des Institutions et des Organisations - UNILIM - Université de Limoges

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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 Shariá compliant financial products. Our results also show that loan quality of Islamic banks is less responsive to domestic interest rates compared to conventional banks.

Keywords: rent-seeking; Islamic banking; Islamic finance; bank risk; credit risk; stability; insolvency; Zscore; rent-seeking. (search for similar items in EconPapers)
Date: 2012-05-03
New Economics Papers: this item is included in nep-ara and nep-rmg
Note: View the original document on HAL open archive server: https://unilim.hal.science/hal-00915115v1
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Citations: View citations in EconPapers (12)

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Related works:
Journal Article: Risk in Islamic Banking (2013)
Working Paper: Risk in Islamic Banking (2013)
Working Paper: Risk in Islamic Banking (2013)
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Persistent link: https://EconPapers.repec.org/RePEc:hal:wpaper:hal-00915115

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