Islamic Banks’ Income Structure and Risk: Evidence from GCC Countries

Abstract:     
The aim of this paper is to investigate the relationship between banks risk and Islamic financial products diversification for Islamic banks in Gulf Cooperation Councils’ Countries. Based on a sample of Islamic banks in GCC countries observed for the period 2002-2008, our research makes evidence that Islamic banks expanding into Profit-Loss-Sharing products present higher risk and higher insolvency risk than banks that invest less in this kind of arrangement. Whereas, no effect is found between the Non Profit-Loss-Sharing product’s net income and risk levels.

Number of Pages in PDF File: 22

Keywords: Islamic bank, risk, Profit-loss-sharing product, Islamic financial products

JEL Classification: G01, G11, G21

working papers series