"The way forward: key islamic finance challenges and road map for Asia" by Dr. Ishrat Husain
 

Faculty / School

Faculty of Business Administration (FBA)

Was this content written or created while at IBA?

Yes

Document Type

Book Chapter

Publication Date

11-4-2013

Author Affiliation

  • Dr. Ishrat Husain is Dean and Director of the Institute of Business Administration, Karachi.

Book or Conference Proceedings Title

Islamic Finance for Asia: Development, Prospects and Inclusive Growth

First Page

107

Last Page

114

Publisher

Co-publication of the Asian Development Bank and the Islamic Financial Services Board

Keywords

Finance,islamic finance,Asia,challenges

Abstract / Description

The Islamic financial system is built-in with principles of Sharī`ah that naturally incorporate several factors promoting market discipline, stability, resilience, and overall ethical practices that instill prudence and soundness in transactions. An Islamic banking system promotes a unique underlying relationship between the depositors and shareholders; by use of partnership and risk-sharing contracts such as Muḍārabah, deposits structured as special accounts have the propensity to absorb losses as opposed to passing them in entirety to shareholders alone. This enables the capital adequacy ratios of Islamic banks to be at comparatively higher levels than those of conventional banks as the loss-absorbing properties of special investment accounts reduce the burden on the equity capital.

Included in

Business Commons

Share

COinS