Analysis of Short-Term Asset Concentration in Islamic Banking

Abbas Mirakhor ()

MPRA Paper from University Library of Munich, Germany

Abstract: In general the process of implementation of Islamic banking in the Islamic Republic of Iran and Pakistan appears to be proceeding with relative success. However, number of problems have surfaced during the transition period, among which is a tendency for short-term assets to dominate commercial bank portfolios. The negative effects on capital formation is one result of this portfolio behavior. The cause of this behavior is a set of regulations constraining profit-sharing activities of commercial banks. It is shown here that such regulations rather than reducing the risks of bankruptcies in the banking system may well increase them.

Keywords: Islamic banking; short-term assets; profit-sharing (search for similar items in EconPapers)
JEL-codes: G21 P44 (search for similar items in EconPapers)
Date: 1987
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Citations: View citations in EconPapers (5)

Published in IMF Working Paper 87.67(1987): pp. 1-28

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