Differences in the risk management practices of Islamic versus conventional financial institutions in Pakistan: An empirical study
Nazik Hussain and
M. Taimoor Hassan
Journal of Risk Finance, 2013, vol. 14, issue 2, 179-196
Purpose - The purpose of this paper is to provide an insight into the differences in the risk management practices of Islamic financial institutions (IFI) and conventional financial institutions (CFI) in Pakistan. Design/methodology/approach - The study makes use of primary data collection method using a questionnaire survey. Findings - Literature review discovered that the types of risks faced by both types of financial institutions can be classified under six categories. The research concludes that credit risk, equity investment risk, market risk, liquidity risk, rate of return risk and operational risk management practices in IFI are not different from the practices in CFI. Whereas the overall risk management practices of IFI and CFI are alike in Pakistan. Research limitations/implications - Further research with a larger sample size is recommended. Practical implications - The paper opens our eyes to the fact that much is unknown about the risk management practices in Pakistani financial system, creating a need for empirical studies for further discoveries to formulate better frameworks and to prevent an impending financial crisis that might be unravelling at the time this paper is being read. Originality/value - This is the first empirical study of its kind that addresses the unmarked topic of RMP in IFI and CFI in Pakistan. The research was conducted because few studies have been executed to understand differences in the risk management practices in Pakistan, exclusively among Islamic financial institutions. This study is expected to expand the existing literature by providing novel empirical evidence.
Keywords: Islam; Financial institutions; Risk management; Risk management practices; Islamic financial institutions; Pakistan; Conventional financial institutions; Empirical; Credit risk; Operational risk; Rate of return risk (search for similar items in EconPapers)
References: Add references at CitEc
Citations View citations in EconPapers (1) Track citations by RSS feed
Downloads: (external link)
http://www.emeraldinsight.com/10.1108/152659413113 ... RePEc&WT.mc_id=RePEc (text/html)
Access to full text is restricted to subscribers
This item may be available elsewhere in EconPapers: Search for items with the same title.
Export reference: BibTeX
RIS (EndNote, ProCite, RefMan)
Persistent link: https://EconPapers.repec.org/RePEc:eme:jrfpps:v:14:y:2013:i:2:p:179-196
Ordering information: This journal article can be ordered from
Emerald Group Publishing, Howard House, Wagon Lane, Bingley, BD16 1WA, UK
http://emeraldgroupp ... /journals.htm?id=jrf
Access Statistics for this article
Journal of Risk Finance is currently edited by Bonnie Buchanan
More articles in Journal of Risk Finance from Emerald Group Publishing
Bibliographic data for series maintained by Virginia Chapman ().