COMPARATIVE ANALYSIS OF CREDIT RISK IN ISLAMIC BANKING VERSUS CURRENT BANKING

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SADEGHI SHAHEDANI MAHDI; AGHABABAEI MOHAMMAD EBRAHIM

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Journal: ISLAMIC FINANCE RESEARCHES Year:2012 | Volume:1 | Issue:1 (1) Page(s): 89-115

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Title

COMPARATIVE ANALYSIS OF CREDIT RISK IN ISLAMIC BANKING VERSUS CURRENT BANKING

Author(s)

SADEGHI SHAHEDANI MAHDI | AGHABABAEI MOHAMMAD EBRAHIM | Issue Writer Certificate

Keywords

ISLAMIC BANKINGQ2

RISKQ2

GHARAQ3

CREDIT RISKQ2

THE VALUE EXPOSED TO RISKQ2

Abstract

Credit RISK is defined as a situation in which the liability itself and its interests are not paid back based on the terms determined in contract. In fact, it is considered as the most important RISK each bank has to encounter, among the ones present in banking operations, which is actually because of bank's later life being dependent on it. Therefore, carefully taken into account, the factors effective on the RISK and the sound management of it can guarantee the bank's stability and profitability. Though the current banking has taken the various dimensions of the issue into consideration, due to the different nature of ISLAMIC BANKING, it is highly necessary to investigate the RISK and, what is more important, to examine the attitude of Islam toward RISK in general. Hence, the aim underlying the present study is to explain the attitude of Islam to the concept of RISK and also to present a theoretical analysis through which to compare credit RISK in ISLAMIC BANKING versus current banking.Although the concepts of RISK and GHARAr are similar in meaning in Islamic discussions, it seems that the two are distinct from each other, thus no criticism will be directed to contracts made on the basis of credit RISK by the viewpoint of Islam. Research shows that despite being less flexible in making use of tools for the management of credit RISK, ISLAMIC BANKING has naturally different contracts and treaties and dissimilar surrounding conditions in the management of credit RISK, which causes such banking to face theoretically less credit RISK, leading to the removal of restrictions existing in the management of RISK. Therefore, through having a sound management of credit RISK, such banking can be more stable compared to the current banking.

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APA: Copy

SADEGHI SHAHEDANI, MAHDI, & AGHABABAEI, MOHAMMAD EBRAHIM. (2012). COMPARATIVE ANALYSIS OF CREDIT RISK IN ISLAMIC BANKING VERSUS CURRENT BANKING. ISLAMIC FINANCE RESEARCHES, 1(1 (1)), 89-115. SID. https://sid.ir/paper/254926/en

Vancouver: Copy

SADEGHI SHAHEDANI MAHDI, AGHABABAEI MOHAMMAD EBRAHIM. COMPARATIVE ANALYSIS OF CREDIT RISK IN ISLAMIC BANKING VERSUS CURRENT BANKING. ISLAMIC FINANCE RESEARCHES[Internet]. 2012;1(1 (1)):89-115. Available from: https://sid.ir/paper/254926/en

IEEE: Copy

MAHDI SADEGHI SHAHEDANI, and MOHAMMAD EBRAHIM AGHABABAEI, “COMPARATIVE ANALYSIS OF CREDIT RISK IN ISLAMIC BANKING VERSUS CURRENT BANKING,” ISLAMIC FINANCE RESEARCHES, vol. 1, no. 1 (1), pp. 89–115, 2012, [Online]. Available: https://sid.ir/paper/254926/en

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