Risk Management in Dual Banking Systems: Islamic Ethical and Conventional Banking
https://doi.org/10.26794/2308-944X-2019-7-4-6-12
Abstract
The author makes comments on the state of the problem in part of the English-speaking scientific thought. The authors present a comparative analysis of risk management conducted in countries where the dual banking system is practised — Islamic (ethical) banking and conventional (western) banking. The study showed that a risk profile of an Islamic bank is not significantly different from the one of the conventional banks in practices. In the beginning, they point out the central thesis and prospects for the development of conventional and Islamic banking. The central part of the comments begins with the historical aspect of the comparison. According to him, despite the differences, they are based on the priority of financial and human values. Further, the authors carefully discuss the risk profile of Islamic banks and the unique risks facing Islamic banks. It was confronted with conventional risk management of banks based on the Basel Committee on Banking Supervision (BCBS). Today, the regulation applies to credit risk, market risk, operational risk and liquidity risk (Basel II and Basel III). After all, the author reaches two essential conclusions for his research.
About the Authors
S. Dimov
Burgas Free University
Bulgaria
Bulgaria
Sava Dimov
Ph.D., Professor
V. Smirnov
Financial University
Russian Federation
Russian Federation
Valery Smirnov
Ph.D. Associate Professor
References
1. Ahmad Al-smadi, Hamdan, A. F., & Almsafir, M. (2013). Islamic banking vs Conventional Banking, During The Global Financial Crisis: Malaysia As A Case. Journal of Islamic and Human Advanced Research, 3(1), 27–40.
2. Basha, S. N. (2017). The Hundred Differences between Islamic and Conventional Banking Systems. International Journal of Scientific Research and Management, 5(9), 7093–7106.
3. Grimarenko, I. Ye. (2015). Comparative Analysis of Islamic and Traditional Western Banking Models. Available at: https://cyberleninka.ru/article/v/sravnitelnyy-analiz-islamskoy-i-traditsionnoy-zapadnoy-bankovskih-modeley (accessed 14th July 2019).
4. Islamic Financial Services Industry Stability Report 2018. (2018). Kuala Lumpur, Malaysia: Islamic Financial Services Board.
5. Islamic Finance vs. Conventional Finance in the UAE. Available at: http://www.loansuae.com/islamic-vs-conventionalfinance-uae/ (accessed 10th July 2019).
6. Jamaldeen, F. (n.d.). How Is Islamic Finance Different from Conventional Finance? Available at: https://www.dummies.com/personal-finance/islamic-finance/how-is-islamic-finance-different-from-conventional-finance/ (accessed 11th July 2019).
7. Lake, Al. (2017). A Modern Comparison of Western Banking to Islamic Banking. Available at: https://classroom.synonym.com/a-modern-comparison-of-western-banking-to-islamic-banking‑12086596.html (accessed 12th July 2019).
8. Margolin, J. (2014). What is the difference between Conventional finance and Islamic — interest-free — finance? Available at: https://www.quora.com/What-is-the-difference-between-Conventional-finance-and-Islamic-interest-freefinance (accessed 14th July 2019).
9. Mohamad, S., Hassan, T., & Bader, M. K. (2008). Efficiency of Conventional versus Islamic Banks: International Evidence using the Stochastic Frontier Approach (SFA). Journal of Islamic Economics, Banking and Finance, 2(4),107–130
10. Naama, K. (2001). Investment policy in developing countries [Investitsionnata politika v razvivashchite se strani]. Svishtov, Republic of Bulgaria: Business world.
11. Naama, K. (2006). Perspectives on globalisation in developing countries (Arabic edition) [Perspektivi na globalizatsiyata v razvivashchite strani]. Svishtov, Republic of Bulgaria: Academic Publishing House “Tsenov”.
Review
For citations:
Dimov S., Smirnov V. Risk Management in Dual Banking Systems: Islamic Ethical and Conventional Banking. Review of Business and Economics Studies. 2019;7(4):6-12. https://doi.org/10.26794/2308-944X-2019-7-4-6-12
Email this article 