Islamic Financial Institutions and Products in the Global Financial System: Key Issues in Risk Management and Challenges Ahead

2002 ◽  
Author(s):  
Luca Errico ◽  
V. Sundararajan
Keyword(s):  
Risk Management ◽  
Financial Institutions ◽  
Financial System ◽  
Islamic Financial Institutions ◽  
Key Issues ◽  
Global Financial System

A proposed framework for implementing risk-based Shari’ah audit

2021 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Suleiman Dalhatu Sani ◽  
Mustapha Abubakar
Keyword(s):  
Financial Institutions ◽  
Real Life ◽  
Financial System ◽  
Practical Work ◽  
System Stability ◽  
Illustrative Case ◽  
Content Type ◽  
Finance Industry ◽  
Islamic Financial Institutions

Purpose This paper aims to recommend a framework that serves as a practical work tool for conducting risk-based Shari’ah audit (RBSA) in Islamic financial institutions (IFIs). Design/methodology/approach Qualitative research method was used through critical in-depth content analysis of documented literature to generate deep insights, further supported with a hypothetical illustrative case study application of the framework on an Islamic bank, aimed at bringing the framework to a practical, near real-life scenario. Findings A robust RBSA framework has been developed which focuses on Shari’ah non-compliance risks to systematically and practically arrive at a rated opinion on the level of an IFI’s adherence with Shari’ah rules and principles as recommended by the Accounting and Auditing Organization for Islamic Financial Institutions, aimed to safeguard the IFI and promote financial system stability at large. Research limitations/implications Practical realities limited the study to the use of a hypothetical case study bank. Future researchers can apply the framework to a real case study of diverse IFIs for effective contextual recalibration in diverse jurisdictions. Practical implications This paper aids the development of both internal and external Shari’ah audit practice using the risk-based approach. Social implications The RBSA framework contributes to promoting public trust and confidence in the Islamic finance industry. Originality/value This paper has proposed this RBSA framework as a practical work tool for Shari’ah auditors in their engagements and regulators in promoting sound governance and financial system stability. It provides foundation for future researchers in the field.

scholarly journals A SUCCINCT ANALYSIS OF MITIGATING LIQUIDITY RISK IN ISLAMIC BANKS IN THE LIGHT OF LIQUIDITY AND RISK MANAGEMENT PRINCIPLES

2019 ◽  
Vol 4 (1) ◽  
pp. 527
Author(s):  
Atharyanshah Puneri ◽  
Naeem Suleman Dhiraj ◽  
Hafiz Benraheem
Keyword(s):  
Risk Management ◽  
Financial Institutions ◽  
Financial Institution ◽  
Real Life ◽  
Liquidity Risk ◽  
Islamic Banks ◽  
Liquidity Management ◽  
Islamic Financial Institutions ◽  
The Subject ◽  
Key Aspects

Liquidity management has been incessantly challenging for the financialinstitutions and especially Islamic financial institutions due to their nature of business. The�convoluted nature of liquidity management impedes the task of Islamic banks in managing�their liquidity efficiently. Given the intricacies of the subject matter, this paper delves into�elaborating the key aspects of liquidity management; subsequently, discusses the�consequences of poor liquidity management and problems inherent in managing the latter by�analyzing the real-life failure of Islamic financial institution as a result identifying the issues that could possibly jeopardize the existence of the Islamic banks. Finally, equipping the�readers with tools to mitigate the liquidity risk.

scholarly journals ISSUES AND CHALLENGES OF FINANCIAL MANAGEMENT PRACTICES IN ISLAMIC FINANCIAL INSTITUTIONS: EMPIRICAL EVIDENCE FROM BANGLADESH

2021 ◽  
Vol 5 (1) ◽  
pp. 38-55
Author(s):  
Serajul Islam ◽  
Abdullahil Mamun ◽  
K. M. Anwarul Islam ◽  
Mohammad Rahim Uddin ◽  
Tania Sultana
Keyword(s):  
Financial Institutions ◽  
Financial Management ◽  
Management Practices ◽  
Financial System ◽  
Principal Component ◽  
Insurance Companies ◽  
Regulatory Body ◽  
Principal Component Factor Analysis ◽  
Islamic Financial Institutions ◽  
The Government

Studies suggest several issues and challenges of financial management practices in Islamic banks and insurance companies and Islamic non-bank financial institutions (INBFIs) in Bangladesh. The purpose of the research is to examine the issues and challenges of Islamic Financial Management (IFM) from an empirical perspective. The study relies on a structured questionnaire survey in prominent Islamic financial institutions (IFIs) of Bangladesh for achieving its objective. After confirming data reliability based on Cronbach's alpha, the study proceeds to analyse by applying descriptive statistics and principal component factor analysis using correlation, Kaiser-Meyer-Olkin (KMO) and Bartlett's Test and VARIMAX Rotation. The study finds that there is no separate regulatory framework to supervise and monitor IFIs in Bangladesh rather the central bank regulates the Islamic financial system based on the existing laws and regulations of the conventional financial system. The findings of this study suggest that the government should establish a separate regulatory body for monitoring the IFI’s functions so that they can perform their activities smoothly in the congenial environment in Bangladesh. JEL Classification Codes: G10, G21, G23.

scholarly journals Risks Faced by Islamic Banks: A Study on the Compliance Between Theory and Practice

2019 ◽  
Vol 10 (2) ◽  
pp. 137
Author(s):  
Salma Rhanoui ◽  
Khalid Belkhoutout
Keyword(s):  
Risk Management ◽  
Financial System ◽  
Qualitative Approach ◽  
Theory And Practice ◽  
Islamic Banking ◽  
Islamic Banks ◽  
Conventional Banks ◽  
Methods Of Operation ◽  
Global Financial System

Risk management is an active field where applications are reconsidered after each obstacle. Islamic banks are not excluded from this rule, particularly when they operate in a global financial system, in which they are occasionally forced to follow conventional banking rules. Nevertheless, Islamic banks are part of a less-advanced industry and face many challenges when handling risk. In theory, Islamic banks are confronted with two categories of risk: common risks, which are similar to the risks faced by conventional banks and risks specific to Islamic banks, due to their specificities and methods of operation. However, practice does not necessarily reflect this dichotomy. Therefore, the purpose of this paper is to make a compliance study between the theory and practice of Islamic banking risks. More precisely, it will compare all the risks fully recognized by the theory to the risks that are actually managed by the Islamic banks in their activities, using a sample of these institutions. The results of this qualitative approach, demonstrate that practice can be quite different from theory.

Sign in / Sign up

Export Citation Format

Share Document