Investigation of the expected loss of sharia credit instruments in global Islamic banks
The purpose of this paper is to investigate the expected outcomes, both of positive and negative returns occurred by shariá credit instruments in global Islamic banks. The annual panel data from 2005 to 2012 is collected from 40 Islamic banks from 12 countries and value at risk (VaR) technique is...
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| Main Authors: | , , |
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| Format: | Article |
| Language: | English English |
| Published: |
Emerald Group Publishing Limited
2015
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| Subjects: | |
| Online Access: | http://irep.iium.edu.my/52570/7/52570.pdf http://irep.iium.edu.my/52570/8/52570-Investigation%20of%20the%20expected%20loss%20of%20sharia%20credit%20instruments%20in%20global%20Islamic%20banks%20_SCOPUS.pdf http://irep.iium.edu.my/52570/ http://www.emeraldinsight.com/doi/abs/10.1108/IJMF-12-2014-0196 |
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| Summary: | The purpose of this paper is to investigate the expected outcomes, both of positive and
negative returns occurred by shariá credit instruments in global Islamic banks. The annual panel data
from 2005 to 2012 is collected from 40 Islamic banks from 12 countries and value at risk (VaR)
technique is employed in the investigation process. The findings of this study indicate several
outcomes: first, majority of Islamic banks use debt-based financing (DBF) and avoid asset-based
financing (ABF) due to the lack of secured rate of fixed returns and collateral. Second, the ABF
financing shows the positive returns. Third, interestingly, DBF financing faces higher credit
risk compared to ABF even DBF secures its financing through tight policy implementation. Finally,
this paper comes up with policy recommendations for the further reduction of credit risks and
improvement of bankers’ confidence level in implementing the ABF financing policy. |
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