Islamic Banking: Experiences in the Islamic Republic of Iran and in Pakistan

Khan, Mohsin S.; Mirakhor, Abbas

doi:10.1086/451797

Cited by 79 publications

(55 citation statements)

References 2 publications

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“…Under the PLS arrangement, bank assets and liabilities are balanced in such a way that borrowers share profits and losses with banks, which in turn share these profits and losses with depositors. Given the emphasis on equity financing, advocates of Islamic banking have argued that the deleveraged nature of Islamic banks contribute to the stability of the financial system (Khan and Mirakhor 1989, Ebrahim and Safadi 1995, Iqbal 1997. Čihák and Hesse (2010), Hasan and Dridi (2011) and Beck et al (2013), amongst others, provide empirical evidence that Islamic banks better withstand negative shocks than conventional banks.…”

Section: Introductionmentioning

confidence: 99%

Islamic Banks, Deposit Insurance Reform, and Market Discipline: Evidence from a Natural Framework

et al. 2016

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Although it has been intensively claimed that Islamic banks are more subject to market discipline, the empirical literature is surprisingly mute on this topic. To fill this gap and to verify the conjecture that Islamic bank depositors are indeed able to monitor and discipline their banks, we use Turkey as a test setting. The theory of market discipline predicts that when excessive risk taking occurs, depositors will ask higher returns on their deposits or withdraw their funds. We look at the effect of the deposit insurance reform in which the dual deposit insurance was revised and all banks were put under the same deposit insurance company in December 2005. This gives us a natural experiment in which the effect of the reform can be compared for the treatment group (i.e., Islamic banks) and control group (i.e., conventional banks). We find that the deposit insurance reform has increased market discipline in the Turkish Islamic banking sector. This reform may have upset the sensitivities of the religiously inspired depositors, and perhaps more importantly it might have terminated the existing mutual supervision and support among Islamic banks.JEL codes: G23, G28, O52

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Section: Introductionmentioning

confidence: 99%

Islamic Banks, Deposit Insurance Reform, and Market Discipline: Evidence from a Natural Framework

et al. 2016

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“…Notably, interest and the crediting or debiting of interest (i.e Riba), does not take place (Ongena & Yuncu, 2011;Khan, 2010;Chong & Liu, 2009;Glaeser & Scheinkman, 1998). Moreover Islamic banks forbid the investment of money in companies which deal with interest (Ray 1995) and contracts which involve risk or speculation (Khan and Mirakhor 1990).…”

Section: Islamic Bankingmentioning

confidence: 99%

Consumer trust and confidence in the compliance of Islamic banks

2015

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Islamic banks compete with traditional (non-Islamic) banks for customers. This paper aims to provide insight into why some Muslims choose to bank with Islamic banks in Pakistan, while others do not. Specifically, it addresses the questions: to what extent are trust and confidence active influencers in the decision making process, are they differentiated or are they one of the same? Also how does the Pakistani collective cultural context further complicate the application of these concepts. For the purposes of this paper trust refers to people and their interpersonal or social relations whereas confidence concerns institutions such as banks.Drawing on interviews with Muslim consumers in Pakistan this study provides further insight into consumer behaviour within financial services and specifically Islamic banking and contributes to our theoretical understanding of the concepts of trust and confidence.

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“…is experienced as politically controversial. In Iran, the building of an Islamic banking system was mainly an outcome of the revolutionary Islamization of society from 1979 onward (Khan and Mirakhor, 1990). This has given rise to a centralization of Shar'ia interpretation in national regulatory bodies, largely operating outside the reach of global Shari'a scholars working for the globalizing IFS sector.…”

Section: The Role and Power Of Shari'a Scholars In The Globalizing Ifmentioning

confidence: 99%

Setting Shari’a standards: On the role, power and spatialities of interlocking Shari’a boards in Islamic financial services

2011

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This paper aims to refine earlier research on the geographies of Islamic financial services (IFS) through a study of how cities are being connected through interlocking directorates in Shari'a advisory boards of IFS firms. The relevance of this analysis is discussed against the backdrop of recent critiques on mainstream 'world cities' research because of structuralist and universalizing tendencies. By applying a network concept to the relationalities of world cities within financial circuits, we explore the nested city/firm/actor structure behind Shari'a board membership, and reassess the connectivity of cities in the IFS network in terms of the role and spatialities of interlocking Shari'a boards. The results show that Gulf cities, most notably Manama, Dubai and Kuwait City are particularly well-connected, while also mainstay financial centres outside the Middle East, such as London and New York are networked by interlocking board memberships of a global Shari'a elite. The dominant position of Manama is traced back to its role as a standard-setting city for Shari'a-compliant investments, which materializes through the enacted presence of an array of highly interlocked regulatory bodies and mediating elites.

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Islamic Banking: Experiences in the Islamic Republic of Iran and in Pakistan

Cited by 79 publications

References 2 publications

Islamic Banks, Deposit Insurance Reform, and Market Discipline: Evidence from a Natural Framework

Islamic Banks, Deposit Insurance Reform, and Market Discipline: Evidence from a Natural Framework

Consumer trust and confidence in the compliance of Islamic banks

Setting Shari’a standards: On the role, power and spatialities of interlocking Shari’a boards in Islamic financial services

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