Financing structure and insolvency risk exposure of Islamic banks

Research output: Contribution to journalArticle

3 Citations (Scopus)

Abstract

This study analyzes the impact of financing structure on Islamic banks' insolvency risk exposure. By analyzing four models, we find that an increase in real estate financing decreases insolvency risk; however, an increasing concentration of financing structure increases insolvency risk. We discover that increasing the stability of the financing structure reduces risk in the short term, but not in the medium term. Interestingly, our findings show that the level of insolvency risk exposure during the 1997 Asian financial crisis was lower than it was for the overall period, whereas it is higher than the overall average in the ongoing global economic crisis. Thus, regulatory bodies, policymakers, and market players in the Islamic banking industry should take appropriate action to in manage the insolvency risk of Islamic banks.

Original languageEnglish
Pages (from-to)419-440
Number of pages22
JournalFinancial Markets and Portfolio Management
Volume24
Issue number4
DOIs
Publication statusPublished - Dec 2010

Fingerprint

Insolvency risk
Islamic financial institutions
Financing
Risk exposure
Asian financial crisis
Global economic crisis
Islamic banking
Politicians
Real estate
Banking industry

Keywords

  • Banking
  • Financing structure
  • Insolvency risk

ASJC Scopus subject areas

  • Finance
  • Accounting

Cite this

Financing structure and insolvency risk exposure of Islamic banks. / Abdul Rahman, Aisyah.

In: Financial Markets and Portfolio Management, Vol. 24, No. 4, 12.2010, p. 419-440.

Research output: Contribution to journalArticle

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