Rifaat Ahmed Abdel Karim

Islamic finance : the new regulatory challenge

About the Editors. About the Contributors. Foreword. Preface. Acknowledgments. 1. Supervision of Islamic Banks and Basel: The Regulatory Challenge (Simon Archer and Rifaat Ahmed Abdel Karim). Part 1. The Nature of Risks in Islamic Banking. 2. Banking and the Risk Environment (Hennie van Greuning and Zamir Iqbal). 3. Risk Characteristics of Islamic Products: Implications for Risk Measurement and Supervision (Dr. V. Sundararajan). 4. Capital Structure and Risk in Islamic Financial Services (Wafik Grais and Anoma Kulathunga). 5. Inherent Risk: Credit and Market Risks (Abdullah Haron and John Lee Hin Hock). 6. Operational Risk Exposures of Islamic Banks (Simon Archer and Abdullah Haron). 7. Law and Islamic Finance: An Interactive Analysis (Yusuf Talal DeLorenzo and Michael J.T. McMillen). 8. Supervisory Implications of Islamic Finance in the Current Regulatory Environment (Hari Bhambra). Part 2. Capital Adequacy. 9. Risk and the Need for Capital (Charles Freeland and Steven Friedman). 10. Measuring Risk for Capital Adequacy: The Issue of Profit-sharing Investment Accounts (Simon Archer and Rifaat Ahmed Abdel Karim). 11. Measuring Operational Risk (Elisabeth Jackson-Moore). 12. Supervisory Implications of Islamic Banking: A Supervisors Perspective (Toby Fiennes). Part 3. Securitization and Capital Markets. 13. Securitization in Islamic Finance (Abdulkader Thomas). 14. The Role of Capital Markets in Ensuring Islamic Financial Liquidity (Stella Cox). 15. Regulating Islamic Capital Markets (Robert Gray and Arshad Ismail). Part 4. Corporate Governance. 16. Corporate Governance for Banks (Hamid Yunis). 17. Specific Corporate Governance Issues in Islamic Banks (Simon Archer and Rifaat Ahmed Abdel Karim). 18. Corporate Governance and Supervision: Basel Pillar 2 (Chizu Nakajima and Barry A.K. Rider). 19. Transparency and Market Discipline: Basel Pillar 3 (Daud Abdullah, David Vicary). Part 5. Conclusion. 20. Human Resource Management of Islamic Banks: Responses to Conceptual and Technical Challenges (Volker Nienhaus). 21. Concluding Remarks (Simon Archer and Rifaat Ahmed Abdel Karim). Index.

Supervisory, regulatory, and capital adequacy implications of profit‐sharing investment accounts in Islamic finance

Purpose – The aims of this paper are: first, to draw attention to the issues of displaced commercial risk (DCR) which arise as a result of the risk characteristics of profit‐sharing investment accounts (PSIA), the main source of funding of Islamic banks in most jurisdictions; and, second, to present a value‐at‐risk approach to the estimation of DCR and the associated adjustments in capital requirements.Design/methodology/approach – The paper is based on empirical research into the characteristics of PSIA in practice, which vary to a greater or lesser extent from what one would expect them to be in principle, on an analysis of the capital adequacy and risk management implications that flow from this, and on an econometric formulation whereby the extent of DCR in Islamic banks may be estimated.Findings – The findings are, first, that the characteristics of PSIA can vary from being a deposit like product (fixed return, capital certain, all risks borne by shareholders) to an investment product (variable retur...