TY - JOUR

T1 - Risk in Islamic Banking

AU - Abedifar, P.

AU - Molyneux, P.

AU - Tarazi, A.

PY - 2013/1/11

Y1 - 2013/1/11

N2 - This article investigates risk and stability features of Islamic banking using a sample of 553 banks from 24 countries between 1999 and 2009. Small Islamic banks that are leveraged or based in countries with predominantly Muslim populations have lower credit risk than conventional banks. In terms of insolvency risk, small Islamic banks also appear more stable. Moreover, we find little evidence that Islamic banks charge rents to their customers for offering Shariá-compliant financial products. Our results also show that loan quality of Islamic banks is less responsive to domestic interest rates compared to conventional banks.

AB - This article investigates risk and stability features of Islamic banking using a sample of 553 banks from 24 countries between 1999 and 2009. Small Islamic banks that are leveraged or based in countries with predominantly Muslim populations have lower credit risk than conventional banks. In terms of insolvency risk, small Islamic banks also appear more stable. Moreover, we find little evidence that Islamic banks charge rents to their customers for offering Shariá-compliant financial products. Our results also show that loan quality of Islamic banks is less responsive to domestic interest rates compared to conventional banks.

U2 - 10.1093/rof/rfs041

DO - 10.1093/rof/rfs041

M3 - Article

JO - Review of Finance

JF - Review of Finance

SN - 1572-3097

ER -