The relative financial strength of Islamic banks is assessed empirically based on evidence covering individual Islamic and commercial banks in 18 banking systems with a substantial presence of Islamic banking. We find that (i) small Islamic banks tend to be financially stronger than small commercial banks; (ii) large commercial banks tend to be financially stronger than large Islamic banks; and (iii) small Islamic banks tend to be financially stronger than large Islamic banks, which may reflect challenges of credit risk management in large Islamic banks. We also find that the market share of Islamic banks does not have a significant impact on the financial strength of other banks.Section III discusses the methodology, and introduces the variables and data used in the paper (characterized in more ... Section V summarizes the conclusions, and suggests topics for further research. ... In particular, Islamic financial services are characterized by a prohibition against the payment and receipt of interest at aanbsp;...
|Title||:||Islamic Banks and Financial Stability|
|Author||:||Mr. Martin Cihák, Heiko Hesse|
|Publisher||:||International Monetary Fund - 2008-01-01|