IMF Working Papers

The Nature of Islamic Banking and Solvency Stress Testing - Conceptual Considerations

By Andreas Jobst, Juan Sole

August 7, 2020

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Andreas Jobst, and Juan Sole. The Nature of Islamic Banking and Solvency Stress Testing - Conceptual Considerations, (USA: International Monetary Fund, 2020) accessed December 2, 2024

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Summary

This paper provides a conceptual overview of key aspects of the design and implementation of solvency stress testing of Islamic banks. Based on existing regulatory standards and prudential practice, the paper explains how Islamic finance principles and their impact on various risk drivers affect the capital assessment of asset-oriented financial intermediation under stress. The formal specification of these risk factors helps operationalize and integrate the stress testing of Islamic banks within established frameworks for financial stability analysis.

Subject: Banking, Credit risk, Financial regulation and supervision, Financial sector policy and analysis, Financial services, Islamic banking, Islamic finance, Market risk, Stress testing

Keywords: Africa, Asset impairment, Asset performance, Capital adequacy, Counterparty risk, Counterparty risk of a bank, Credit risk, DCR bank, Deposit base, E. market risk, Financial system, Global, Interest rate, Investment risk, Investment risk reserve, Islamic bank, Islamic banking, Islamic finance, Islamic finance principles, Liabilities consist, Market risk, Market risk, Middle East and Central Asia, Operating income, Rate of return, Shari’ah compliance., Southeast Asia, Stress testing, WP

Publication Details

  • Pages:

    77

  • Volume:

    ---

  • DOI:

    ---

  • Issue:

    ---

  • Series:

    Working Paper No. 2020/156

  • Stock No:

    WPIEA2020156

  • ISBN:

    9781513550886

  • ISSN:

    1018-5941

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