Risk Managment

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  • Topic: Islamic banking, Risk, Operational risk
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MP A
R
Munich Personal RePEc Archive

Risk management in Islamic banks
Helmy, Mohamed
ESLSCA Business School

20. April 2012

Online at http://mpra.ub.uni-muenchen.de/38706/
MPRA Paper No. 38706, posted 09. May 2012 / 10:37

ESLSCA Business School

Risk Management in Islamic Banks
By
Mohamed Helmy Ahmed

Master of International Business Administration
Finance

Supervisor
Dr.Khalil Abo Ras

Academic Year : 2012

0

Table of content
Acknowledgement
Abstract
Chapter one
1.1 Introduction
1.2 Profit and Loss Sharing (PLS)
1.3 Different types of Islamic Financial Institutions products 1.4 Problem Definition
1.5 Research objectives
Chapter Two
2.1 Literature review
2.2 Defining Risk

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2.3 Definition for different types of risks in Islamic Financial Institutions
2.4 Nature of risks in Islamic Financial Institutions
2.4.1 Credit Risk
2.4.2 liquidity risk
2.4.2.1 Categorizations of liquidity risk
2.4.2.2 Liquidity risk sensitivity in Islamic Financial Institutions 2.4.3 Market risk
2.4.3.1 Markup risk
2.4.3.2 Price Risk
2.4.3.3 Leased Asset Value Risk
2.4.3.4 Currency risk
2.4.3.5 Securities price risk
2.4.4 Operational Risk
2.5 Unique risks in Islamic Financial Institutions
2.5.1 Rate Of return Risk
2.5.2 Displaced commercial risk
2.5.3 Equity investment risk
2.6 Basel II:
2.6.1 Overview of the Basel capital Adequacy framework
2.6.2 Pillar 1 : Capital Adequacy Requirement

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2.6.3 Pillar 2 : Supervisory review
2.6.4 Pillar 3: Market Discipline
Chapter 3
Finding
3.1 Risk Management
3.1.1 Credit Risk Management
3.1.2 Liquidity risk management
3.1.3 Rate of return Risk management
3.1.4 Displaced commercial risk management
3.1.5 : Operational Risk Management
3.1.6 Market Risk Management
3.2.7 Equity Investment risk management
3.2 Risk measurements
3.2.1 Credit risks measurements in Sales Based Contract
3.2.2 Liquidity Risk measurement
3.2.3 Equity Risks measurement in Mudarabah and Musharakah
facilities :
3.2.4 Market Risks and Rate of Return Risks measurement:
3.2.5 Operational Risk measurement
3.3 Standardized models in measuring different types of risks 3.3.1 GAP Analysis
3.3.2 Duration-GAP Analysis
3.3.3 Credit Value at Risk (VaR)
3.3.4 Risk Adjusted Rate of Return (RAROC)

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3.4 Managing the Capital adequacy according to the
major approaches followed by the Islamic Financial Institutions Chapter four
Conclusion
Chapter five
Recommendation
Bibliography
Case Study - Faisal Islamic bank , Financial year 2010

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List Of Figures
Figure 1 : Different types of risk in Islamic banks
Figure 2 : Calculations the profit attributed between
shareholders and IAH and retention of ( PER and IIR )
Figure 3 : Basic concept of VAR
Figure 4: Estimation of risk capital for RAROC
Figure 5: IFSB principle for CAR

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List Of Tables

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Table 1 : Definitions for Islamic banks different products
Table 2: Different types of risks
Table 3 : Major Guidelines for risk management according to IFSB

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Table 4: Types of accounts in Islamic and conventional banks

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Acknowledgement
First I would like to thank God the most generous for enabling me to start and reach this phase in the MIBA degree.
I am sincerely and heartily grateful to my advisor Dr. Khalil Abu Ras , for the support and guidance he showed me throughout my dissertation writing. I am sure it would have not been possible without his help. Beside I would like to express my deepest appreciation for Dr. Ahmed Bahaa for his knowledge which have been transferred to me and all my colleagues very smoothly .

Also I would like to thank all of ESLSCA professors for their guidance...
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