Risk Assessment of Islamic Banking Products: A Case Study of Murabaha and Ijarah
There are several implications for the risk management strategy of any financial organization that has adopted the Islamic banking philosophy. Generally speaking, Islamic banking is exposed to the same risks as traditional banking, such as credit, market, liquidity, and operational risks. On the oth...
Saved in:
Main Authors: | , , |
---|---|
Other Authors: | |
Format: | Conference Paper |
Published: |
Springer Science and Business Media Deutschland GmbH
2024
|
Subjects: | |
Tags: |
Add Tag
No Tags, Be the first to tag this record!
|
id |
my.uniten.dspace-34709 |
---|---|
record_format |
dspace |
spelling |
my.uniten.dspace-347092024-10-14T11:21:56Z Risk Assessment of Islamic Banking Products: A Case Study of Murabaha and Ijarah Yusoff A. Hassan R. Salman S.A. 55542782500 55541623500 56901963000 Assessment Islamic banking Murabaha and Ijarah Risks Commerce Finance Risk assessment Wages Assessment Case-studies Credit risks Islamic banking Liquidity risk Market risks Murabaha and ijarah Operational risks Risk management strategies Risks assessments Risk management There are several implications for the risk management strategy of any financial organization that has adopted the Islamic banking philosophy. Generally speaking, Islamic banking is exposed to the same risks as traditional banking, such as credit, market, liquidity, and operational risks. On the other hand, the sources of risk and risk mitigation strategies differ from those used in conventional banking. Many agreements may be subjected to the same risks, but how those risks influence each contract may vary. Islamic banks are obligated to follow Shariah principles in their business activities. According to Islamic law, loans and deposits with a predetermined fixed return are not permitted under Shariah principles. Consequently, Islamic banks� resource mobilization and funding are based on profit-sharing and risk-sharing arrangements. While risk is a necessary component of Islamic business dealings, uncertainty (Gharar) is illegal. This article aims to assess the specific risks associated with contracts issued by international financial institutions (IFIs), emphasizing two types of Shariah contracts, namely Murabaha and Ijarah. It has been established that both Murabaha and Ijarah, sale-based contracts, will subject the financial institution to the same risks, including credit, operational, market, and liquidity risks. � 2023, The Author(s), under exclusive license to Springer Nature Switzerland AG. Final 2024-10-14T03:21:56Z 2024-10-14T03:21:56Z 2023 Conference Paper 10.1007/978-3-031-26956-1_55 2-s2.0-85152558068 https://www.scopus.com/inward/record.uri?eid=2-s2.0-85152558068&doi=10.1007%2f978-3-031-26956-1_55&partnerID=40&md5=059b7089ac51372286a42fa34442fac2 https://irepository.uniten.edu.my/handle/123456789/34709 621 LNNS 581 592 Springer Science and Business Media Deutschland GmbH Scopus |
institution |
Universiti Tenaga Nasional |
building |
UNITEN Library |
collection |
Institutional Repository |
continent |
Asia |
country |
Malaysia |
content_provider |
Universiti Tenaga Nasional |
content_source |
UNITEN Institutional Repository |
url_provider |
http://dspace.uniten.edu.my/ |
topic |
Assessment Islamic banking Murabaha and Ijarah Risks Commerce Finance Risk assessment Wages Assessment Case-studies Credit risks Islamic banking Liquidity risk Market risks Murabaha and ijarah Operational risks Risk management strategies Risks assessments Risk management |
spellingShingle |
Assessment Islamic banking Murabaha and Ijarah Risks Commerce Finance Risk assessment Wages Assessment Case-studies Credit risks Islamic banking Liquidity risk Market risks Murabaha and ijarah Operational risks Risk management strategies Risks assessments Risk management Yusoff A. Hassan R. Salman S.A. Risk Assessment of Islamic Banking Products: A Case Study of Murabaha and Ijarah |
description |
There are several implications for the risk management strategy of any financial organization that has adopted the Islamic banking philosophy. Generally speaking, Islamic banking is exposed to the same risks as traditional banking, such as credit, market, liquidity, and operational risks. On the other hand, the sources of risk and risk mitigation strategies differ from those used in conventional banking. Many agreements may be subjected to the same risks, but how those risks influence each contract may vary. Islamic banks are obligated to follow Shariah principles in their business activities. According to Islamic law, loans and deposits with a predetermined fixed return are not permitted under Shariah principles. Consequently, Islamic banks� resource mobilization and funding are based on profit-sharing and risk-sharing arrangements. While risk is a necessary component of Islamic business dealings, uncertainty (Gharar) is illegal. This article aims to assess the specific risks associated with contracts issued by international financial institutions (IFIs), emphasizing two types of Shariah contracts, namely Murabaha and Ijarah. It has been established that both Murabaha and Ijarah, sale-based contracts, will subject the financial institution to the same risks, including credit, operational, market, and liquidity risks. � 2023, The Author(s), under exclusive license to Springer Nature Switzerland AG. |
author2 |
55542782500 |
author_facet |
55542782500 Yusoff A. Hassan R. Salman S.A. |
format |
Conference Paper |
author |
Yusoff A. Hassan R. Salman S.A. |
author_sort |
Yusoff A. |
title |
Risk Assessment of Islamic Banking Products: A Case Study of Murabaha and Ijarah |
title_short |
Risk Assessment of Islamic Banking Products: A Case Study of Murabaha and Ijarah |
title_full |
Risk Assessment of Islamic Banking Products: A Case Study of Murabaha and Ijarah |
title_fullStr |
Risk Assessment of Islamic Banking Products: A Case Study of Murabaha and Ijarah |
title_full_unstemmed |
Risk Assessment of Islamic Banking Products: A Case Study of Murabaha and Ijarah |
title_sort |
risk assessment of islamic banking products: a case study of murabaha and ijarah |
publisher |
Springer Science and Business Media Deutschland GmbH |
publishDate |
2024 |
_version_ |
1814060125319593984 |
score |
13.214268 |