Islamic Finance

Stress testing is an essential risk management tool that helps financial institutions to identify, assess and mitigate risks in their businesses. Stress tests have been and are an excellent tool for understanding the plausible impact of a what-if scenario in banking industry. The global financial crisis has placed the spotlight squarely on stress tests. Though, Islamic banks operate within the similar financial environment, and their balance sheet composition, however, calls for different treatment in stress testing.

Banking regulations play an inevitable role for the stability of a country’s financial system and economy at large. Banking regulation on capital requirements known as Basel III will have a large effect on the world’s financial systems and economies. On the positive side, toughened capital and liquidity requirements should make national and global financial system safer. On the other side, enhanced safety will come at a cost, since it is expensive for banks to hold extra capital and to be more liquid.

This study aims to shed light on the risk structure in the presence of Islamic banking, in particular in Turkey. Islamic banking and conventional banking are considered to be different kind of sources for funding. Returns in the conventional banking expected to be heavily influenced by the interest rate in the money market. However, Islamic banking returns are interest-free so that interest rate changes are not expected to affect the deposit returns in Islamic banks. Interest rates in the economy is a proxy to highlight the general risk level of the economy.

Banks avoid participatory financing due serious information asymmetries, adverse selection and moral hazard problems with negative impacts for the return on capital provided. Even financing instruments with a participatory legal form such as musharakah sukuk have been stripped of their risk sharing substance and became functional equivalents of interest-bearing bonds.

The changing political scene in North Africa is resulting in a much greater interest in Islamic finance and what it has to offer. The modern practice of Islamic finance started in Egypt with the Mit Ghamr experiment of 1963. Such project had a strong focus on development and provided micro-savings and micro-loans before microfinance was conceptualized as such in the 1970s. Nowadays, Egypt has the potential to develop a new homegrown model focused on development that could avoid cosmetic “Islamic” finance.

This study examines the impact of globalization on cross-country inequality and poverty using a new comparable panel data for Organisation of Islamic Cooperation (OIC) and non-OIC developing countries over a long period, 1970–2008. The overall results of this study show that globalization exerts adverse distributional and poverty consequences and, comparatively, OIC countries suffer more from the adverse consequences of globalization. This study concludes that OIC countries are different from non-OIC countries in terms of their exposure with globalization.

The role of public infrastructure in reducing poverty, distributing wealth and improving economic growth is central in an economy. Surprisingly, among abundant studies discussing poverty and economic growth in

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Corporate governance systems are continuously converging and inherently presuppose the predominance of law. Strong emphasis is put on checks and balances and monitoring systems. However, despite convergence tendencies there are also differences in corporate governance systems that often stem from different commercial and legal cultures, the prevailing political and economic conditions and the development of the macroeconomic model. Religious traditions and moral aspects also come into play. Islamic financial institutions are significantly subject to multi-level governance systems.