The Islamic Banking System ( Credit Risk )

Good Essays
In the Islamic banking system,according to sources and causes of risks, it might be an external risk which due to changes in risk policies and regulations caused by banking supervisory authorities ( regulatory risk ) or macro and external impact of benchmarks such as LIBOR interest rate factors, namely the use of determine the speed mark Islamic Bank ( known as interest rate risk ) ;There are risks to fulfill obligations related to the debtor by Islamic Banking( Credit risk ) , there are a set of risks, operational risks collectively,Islamic banks themselves , the people involved / staff, including errors, negligence and fraud, the system and the use of technology in the Islamic Banking , the proceedings and / or processes and procedures…show more content…
Sundarajan and Errico (2002) pointed out that attach to various non- PLS methods, such as the specific risks of Salam and Ijara. Firstly, the Islamic bank is exposed to credit and commodity price risk ; Secondly, unlike traditional lease contracts, Islamic banks can not transfer ownership , and therefore have to bear all risks until the end of the lease .

Credit risk in Islamic banks
Musharakah, Mudarabah, Istisna’, Salam, Ijarah and murabahah is the main contract with their customers to use in providing facilities for Islamic banks. Possible classification , these contracts may be: Islamic pattern of non- debt financing (Musharakah and Mudarabah) and debt creation mode ( the Other ) . A third possible classification : Original Islamic mode of financing (Musharakah, Mudarabah, Istisna , Salam ) and financing of "reinventing " mode (Ijarah and murabahah).

Credit risk is the most important source of risk in Islamic banking and in Conventional banks.Credit risk ( counterparty risk of failure ) is significant for banks that 1988 standards of Basel Committee on Banking Supervision Bank. Capital requirements , the establishment of a major deal with this risk. Default risk which the risk of the bank portfolio covering 80 % of the average bank account ; It is 80% of cases of bank failures reasons. It is generally considered the Islamic Banks face higher credit risk than their traditional counterparts . Islamic banks ( which is not the Islamic Bank based on
Get Access