Challenges For Islamic Banks

Ch on the wholeenges for Muslim Banks The unique characteristics of Moslem argoting give rise to a set of challenges that have to be addressed by Muslim banks. These include: Establishing appropriate mint and fluidity focussing techniques Achieving arranged sharia supervision Managing the gift pool Addressing legal and receipts restrictions Establishing appropriate risk and liquidity oversight techniques: The risk profiles of Islamic finan¬cial institutions differ from those of their conventional look forparts because of nigh of the Islamic financial support techniques. For example, in an auto murabahah transaction, there is a risk that the customer vow not purchase the vehicle from the bank compensate though he commit¬ted to do so. The less standard¬ized the goods financed by means of murabahah, the greater the risk. This risk is even more relevant in the mutajarah business, in which the bank purchases sure assets or commodities and holds them as inventory. As a result, Islamic banks admit to evaluate their risk centering techniques and deploy appropriate capabilities to counter or mitigate risks. formulaic risk manage¬ment techniques and instruments are not repletey fitted for all Islamic banks.

When an Islamic bank engages in the mutajarah business, for example, risk associ¬ated with guardianship inventory must be managed, and thus cross-indus¬ study know-howsuch(prenominal) as that of retailersneeds to be transferred and applied accordingly. A major challenge facing Islamic banks is the absence of short-run liquidity management and longer-term refinancing instruments. As a result, asset indebtedness management is becoming a reliable enigma. On the short-term side, sharia-compliant cash market instruments are in short run and commodity-based retrovert murabahah transactions can entirely be regarded as an lag solution. A similar problem exists on the long financing side, where the issuance of sukuk is the only natural selection available nevertheless requires an cardinal asset on which to...If you extremity to get a full essay, order it on our website: Ordercustompaper.com

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