Credit risk management: a case differentiating Islamic and non‐Islamic banks in UAE

Omar Masood, Hasan Al Suwaidi and Priya Thapa

Qualitative Research in Financial Markets, 2012, vol. 4, issue 2/3, 197-205

Abstract: Purpose - The purpose of this paper is to identify any differences between the Islamic and non‐Islamic banks in the UAE on credit risk management. Design/methodology/approach - The study uses survey based methodology for data collection. The sample for the study consists of six commercial banks from UAE with three non‐Islamic and three Islamic banks and with 148 credit risk managers as respondents for the survey. The study aims to investigate factors which distinguish between Islamic and non‐Islamic banks in UAE. This is achieved by fitting a binary logistic regression model. Findings - The study shows that the managers in Islamic banks now do not rely only on personal experiences and simple credit risk analysis. The Islamic banks appear also to be developing and practising the newer and robust techniques, in addition to traditional methods, to manage their credit risk in UAE compared to non‐Islamic banks, which indicates a possibility of further improvement in their credit risk management. Originality/value - The paper uses questionnaire‐based methodology, which has not been used previously in the UAE financial sector, as well as in studies of credit risk management. Therefore, this research could become the cornerstone of further academic research in other developing countries using this methodology.

Keywords: United Arab Emirates; Islam; Banking industry; Financial services; Credit management; Credit risk management; Islamic and non‐Islamic banks; UAE financial sector; Logistic regression analysis; Questionnaire method; Banking and finance (search for similar items in EconPapers)
Date: 2012
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Citations: View citations in EconPapers (3)

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Persistent link: https://EconPapers.repec.org/RePEc:eme:qrfmpp:v:4:y:2012:i:2/3:p:197-205

DOI: 10.1108/17554171211252529

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