During 1997-2018, Islamic Banks (IBs) in Sudan provided finance by Murabaha mode to their clients with more than 45% on average. This position raises questions of why do IBs concentrating finance in Murabaha Mode rather than other modes? is this concentration implying risk and does it have influence on the financial performance of IBs? This study aimed to discusses the reasons and answer these questions. Nonperforming loan(NPL), Murabaha to gross finance, Musharaka to gross finance, Mudabaha to gross finance and Salam to gross finance were used to indicate the credit risk. Return on Equity (ROE) was used to indicate the financial performance of IBs. Ordinary least squares technique was employed to determine the trend of relations between the variables. The main results of the study show that there is an important positive relationship between the NPL and provision finance by both Murabaha and Mudaraba modes. Whereas were a negative with both Musharaka and Salam. Moreover, it’s found that there is strong negative relationship between NPL and ROE. The main reason for the expansion granting finance by Murabaha mode is that IBs are heavy rely on collaterals and in case of clients’ failure to pay, they sell collaterals to keep their financial performance safety. The study strongly recommends IBs importance of diversify the granting finance among Islamic modes of finance to avoiding the risk of concentration the finance by Murabaha mode. Furthermore, monetary authority in Sudan need to keep IBs aware with the risk associated with Islamic modes, especially Murabaha.

The study aims to assessment the financial performance (FP) of Islamic Commercial Banks (ICBs) in Sudan under credit risk (CR) and inflation pressures . Data were collected from the annual reports of the Central Bank of Sudan (CBOS). Unit root test were applied. Ordinary least square method were used to determine the direction of the relations between the FP measured by return on assets (ROA) as indicator the dependent variable and the following independents variables: ratio of nonperforming loan to total finance, ratio of provision finance by murabaha mode to total finance, capital adequacy ratio and inflation rate were used as indicators the CR. The results found that the CR indicators are negatively affecting the FP of ICBs.The study recommends that ICBs should not totally rely on collateral as a reason for expanding the provision of finance in murabaha mode as the market value of collateral might decrease against the finance. CBOS should adopt contractionary monetary policy to reduce inflation. Moreover, implementation of Basel Accord to support ability of the regulatory capital of ICBs to cope with CR.

Through a regression model, the study highlighted the role of the banking finance and monetary policy in enhancing human development index (HDI) in Sudan during the period (1999)(2000)(2001)(2002)(2003)(2004)(2005)(2006)(2007)(2008)(2009)(2010)(2011)(2012)(2013)(2014)(2015)(2016)(2017)(2018). The descriptive analytical approach was used to achieve the objectives of the study. Secondary data were collected from; annual reports of the Central Bank of Sudan, World Bank and UNDP database. Inflation rates were used to indicates the efficiency of monetary policy. To ensure stationary of the variables used to estimate the model, Augmented Dickey-Fuller (ADF) and unit root tests were calculated. Results of ADF test show that, the set of variables are stationary at 1 st difference. Ordinary least squares method was used to determine and conclude the direction of relations between the HDI and variables. The results found that there is a positive relationship between HDI and changes in provision of banking finance and inflation during the period of the study. Moreover, it's found that, monetary policy in term if inflation indirectly contributed to enhances HDI through money supply increase. The study recommends the commercial banks in Sudan to expand granting finance to the various economics activities especially the production sector. Furthermore, monetary authority should adopt contractionary monetary policy to reduce inflation and improve the standard of living.

The paper aims to examine the impact of Liquidity Shortage Risk (LSR) on the financial performance of Islamic Commercial Banks (ICBs) in Sudan (1992Sudan ( -2018. The following explanatory powers were used to indicate LSR; which include: liquid assets to total assets, total finance to total deposits, current deposits to total deposits and inflation as a control factor. The financial performance of ICBs (the dependent variable) was measured by the return on assets. To concludes the relation between the variables, data were analyzed thought used Ordinary Least Squares technique. The main findings revealed that current deposits to total deposits, total finance to total deposits and inflation negatively affected the financial performance. While liquid assets to total assets have positive influence to the performance of ICBs. Monetary policy indirectly contributed to the exposure of ICBs to LSR through money supply increase. Moreover, high inflation motivated depositors to high cash withdrawal from their deposits; and, consequently exposed ICBs to LSR. The study recommends that ICBs should not wholly depend on current deposits as a source of finance, because customersʹ default might lead to LSR resulting in deteriorating profitability. Moreover, diversification of financial assets (with high liquidity) protects them from LSR. As for the central bank, the contractionary monetary policy is a crucial to control inflation in order to improve the financial performance of ICBs.

This paper critically reviews the developmental stages of banking (Conventional and Islamic) in Sudan throughout the last 115 years (1903-2019). Historical and descriptive-analytical approaches were used. Historical data collected from the annual reports of The Central Bank of Sudan and relevant studies were used to describe and compare stages during that period. The results indicated that political instability and ideology changes of the state (e.g., Colonialism, independence and democracy, socialism and Islamic) systems played a significant role in the formation of stages of development of Sudan’s banking systems (e.g., conventional, Islamic, dual system). Moreover, the implementation of the Islamic Sharia Law in 1983 was the original basis for the augmentation of the Islamization of the country’s banking system, particularly as it pertained to the prohibition of charging interest. Under the Comprehensive Peace Agreement (CPA: 2005-2010), the conventional banking (interest rate) in Southern Sudan was restored, whereas the Islamic approach continued in the north. Notwithstanding, all banks were managed by one central bank in the north namely The Central Bank of Sudan. The study highlights the relationship between factors affecting political stability and the growth of stability and the banking system.