Islamic Banks and Financial Stability: An Empirical Analysis

January 1, 2008

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Format: Chicago

Martin Cihak, and Heiko Hesse. Islamic Banks and Financial Stability: An Empirical Analysis, (USA: International Monetary Fund, 2008) accessed September 19, 2024

Disclaimer: This Working Paper should not be reported as representing the views of the IMF.The views expressed in this Working Paper are those of the author(s) and do not necessarily represent those of the IMF or IMF policy. Working Papers describe research in progress by the author(s) and are published to elicit comments and to further debate

Summary

The relative financial strength of Islamic banks is assessed empirically based on evidence covering individual Islamic and commercial banks in 18 banking systems with a substantial presence of Islamic banking. We find that (i) small Islamic banks tend to be financially stronger than small commercial banks; (ii) large commercial banks tend to be financially stronger than large Islamic banks; and (iii) small Islamic banks tend to be financially stronger than large Islamic banks, which may reflect challenges of credit risk management in large Islamic banks. We also find that the market share of Islamic banks does not have a significant impact on the financial strength of other banks.

Subject: Banking, Commercial banks, Financial sector stability, Islamic banking, Personal income

Keywords: Bank, Commercial bank, Macroeconomic variable, Market share, WP

Publication Details

Pages:

29
Volume:

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DOI:

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Issue:

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Series:

Working Paper No. 2008/016
Stock No:

WPIEA2008016
ISBN:

9781451868784
ISSN:

1018-5941

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