Issues in the risk and regulation of Islamic banking

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Ariff, M., Lewis, M. K., & Shamsher, M. (2014). Issues in the risk and regulation of Islamic Banking. In M. K. Lewis, M. Ariff, & S. Mohamad (Eds.) Risk and Regulation of Islamic Banking (pp. 1-7). Cheltenham, United Kingdom: Edward Elgar Publishing Ltd.

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© Copyright Mervyn K. Lewis, Mohamed Ariff and Shamsher Mohamed, 2014




Extract: This book is the result of an international collaboration of scholars, all specializing in the field of Islamic finance, publishing symposium findings under the Edward Elgar series on the Foundations of Islamic Finance. Following an initial volume, The Foundations of Islamic Banking. Theory, Practice and Education, 2011, the first volume in the series dealt with a specialized area, namely the Islamic Debt Market for Sukuk Securities (2012). The present book is entitled Risk and Regulation of Islamic Banking, and in comparison with the 2011 volume contains conceptual material, along with new ideas on Islamic banking products, risk, regulation and associated practical issues. While the 2011 book provide a general introduction to some of the ethical principles – such as participative banking mandated via profit-sharing and risk-sharing instead of pre-agree interest payments, which has been widely used in conventional banking since the sixteenth century – we provide in this new volume an analysis of some of the available Islamic banking products, in particular, how these products ought to be designed in practice, by examining a number of banking products and their risk elements. The book also documents the process through which some countries have brought in new regulations to manage this participative risk-sharing banking to deliver a similar level of service as conventional banking with the added ethical dimension. In fact, the mode of pricing financial instruments in this new banking system draws on ethical dictates, long since abandoned over two-and-half centuries by modern banking with the new modes of financial transactions.

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