Risk Analysis for Islamic Banks

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World Bank Publications, 2008 - Počet stran: 309
Islamic finance is emerging as a rapidly growing part of the financial sector in the Islamic world and is not restricted to Islamic countries, but is spreading wherever there is a sizable Muslim community. According to some estimates, more than 250 financial institutions in over 45 countries practice some form of Islamic finance, and the industry has been growing at a rate of more than 15 percent annually for the past several years. The market's current annual turnover is estimated to be $70 billion, compared with a mere $5 billion in 1985, and is projected to hit the $100 billion mark by the turn of the century. Since the emergence of Islamic banks in the early 1970s, considerable research has been conducted, mainly focusing on the viability, design and operations of a deposit-accepting financial institution, which operates primarily on the basis of profit and loss partnerships rather than interest.
This publication provides a comprehensive overview of topics related to the assessment, analysis, and management of various types of risks in the field of Islamic banking. It is an attempt to provide a high-level framework (aimed at non-specialist executives) attuned to the current realities of changing economies and Islamic financial markets. This approach emphasizes the accountability of key players in the corporate governance process in relation to the management of different dimensions of Islamic financial risk.
 

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Box 32 Fit and Proper Standards for Bank Management
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Box 33 The Responsibilities of Management
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Box 34 The Responsibilities of Audit Committees and Internal Auditors
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Box 35 The Responsibilities of External Auditors
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Table 41 Importance of Key Stakeholders in the Islamic Finance Industry
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Risk Management
63
Table 51 Banking Risk Exposures
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Table 52 Contractual Role and Risk in Islamic Banking
69
Table 53 Stages of the Analytical Review Process
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Figure 51 Composition of an Islamic Banks Assets by Periods
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Figure 52 Trends in Asset Growth by Period
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Table 54 BalanceSheet Composition of Assets
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Table 55 BalanceSheet Growth Year on Year
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Figure 61 Composition of an Islamic Banks Balance Sheet
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Figure 62 Structure of an Islamic Banks Assets
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Figure 63 Structural Change and Asset Growth 200106
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Table 62 Islamic Financing and Investing Assets Grass
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Table 63 Percentage Composition of the Balance Sheet 200106
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Figure 65 Hypothetical Growth of Assets
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Table 71 Composition of the Income Statement 200506
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Table 72 Percentage Composition of Islamic Products Revenues over Time
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Figure 71 Asset Structure versus Income Structure
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Figure 72 Relationship of Income to Expenses 200106
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Table 73 Profitability Ratios 200106
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Figure 73 Select Profitability Ratios 200106
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Return on Assets ROA and on Equity ROE Adjusted for the Cost of Capital
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Box 81 IFSB Principles of Credit Risk
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Figure 81 Exposure to 20 Largest Exposures Hypothetical Example
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Table 81 RelatedParty Lending
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Who Are We Investing In?
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Who Are We Investing In?
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For How Long Are We Investing?
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Box 82 Content of an Investment and Financing Asset Review File
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Box 83 Signs of a Distorted Credit Culture
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Box 84 Asset Classification Rules
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Table 85 Recommended Provisions
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Box 94 IFSB Principles of Equity Investment Risk
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Figure 93 Exposure to Marketable Securities 200106
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Table 94 Simplistic Calculation of Net Effective Open Positions Assuming Uniform Instruments in Every Market
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Figure 94 Simplistic Impact on Equity of Marking to Market
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Governance and Regulation
183
Figure 111 Corporate Governance Structures in Institutions Offering Islamic and Conventional Financial Services
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Table 111 Presence of a Centralized Shariah Supervisory Board or Islamic Rating Agency in Select Countries
188
Table 113 External Shariah Boards in Select Countries
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Box 111 IFSB Principles of Corporate Governance for Islamic Banks
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Box 121 Criteria for Evaluating Accounting Standards
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Figure 121 Transparency in Financial Statements Achieved through Compliance with the IFRS Framework
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Box 122 Survey on Public Disclosure of Banks
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Box 123 AAOIFI Standards
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Table 121 Disclosure Practices of Islamic Banks
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Table 131 Classification of Capital in the Basel Accords
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Box 131 IFSB Principles for Minimum Capital Adequacy Requirements CAR
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Box 132 IFSB Standard Formula for CAR
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Basel II versus IFSB
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Figure 131 Framework for Measuring Credit Risk Weights
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Figure 132 Framework for Measuring Market Risk Weights
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Box 134 Computation of CAR for an Islamic Bank
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Figure 133 Components of Bank Capital
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Figure 134 Risk Profile of Assets
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Table 135 Trend Analysis of Capital Adequacy Ratios
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Figure 135 Capital Tiers and Compliance
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Figure 141 The Context of Bank Supervision
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Table 141 Stages of the Analytical Review Process
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Table 142 Adapting the External Audit to Specific Circumstances and Needs
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Future Challenges
257
References
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A Glossary of Islamic Terms
281
B IFSB Standard on Risk Management
285
C Proposed Outline for Bank Analytical Reports
293
Index
297
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