Islamic Finance Strife: Risk Management, Regulation, and Supervision

Amadou Thierno Diallo () and Ahmet Suayb Gundogdu ()
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Amadou Thierno Diallo: Islamic Development Bank
Ahmet Suayb Gundogdu: Islamic Development Bank

Chapter 6 in Sustainable Development and Infrastructure, 2021, pp 95-110 from Palgrave Macmillan

Abstract: Abstract Transition from deposit banking model to crowdfunding model The Islamic finance industry has a tendency of converging toward a conventional system with controversial practices in order to keep up with all financial products offered by the conventional system. This chapter reflects on these practices: accruing of late payment interest charges as profit deprivation, trade finance products, and treasury practices such as some Sukuk, commodity Murabaha for liquidity management, and Islamic swaps or hedging contracts of Islamic forward. The alternative courses are presented to overcome controversies pertaining to these practices from a Shariah aspect. Being peculiar to Islamic finance, risk management practices and regulatory and supervisory enablers are arguable missing or set for wrong direction, but these practices are needed to put the industry on track in the transition from deposit banking to crowdfunding.

Keywords: Deposit banking; Factoring; Debt; Letter of credit; Credit default; Hedging (search for similar items in EconPapers)
Date: 2021
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Persistent link: https://EconPapers.repec.org/RePEc:pal:psibcp:978-3-030-67094-8_6

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DOI: 10.1007/978-3-030-67094-8_6

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