Risks Exposure in Islamic Banks: A Case Study of Bank Islam Malaysia Berhad (BIMB)

24 Pages Posted: 1 Jul 2010  

Ishaq Bhatti

La Trobe University - School of Economics and Finance; Financial Research Network (FIRN)

Faridah Najuna Misman

La Trobe University; Universiti Teknologi MARA (UiTM) - Faculty of Business and Management

Date Written: June 30, 2010

Abstract

The growth and changes in the global financial markets pose various risks to the financial pectoral over the world. Risk cannot be avoided as it is part and parcel of its operations. Banking institutions are likewise exposed to risks. As conventional banks have to face three major risks; i) credit risk, ii) market risk, iii) operational risk, similarly Islamic banks also face the same. The perception that Islamic banks are risk free is not correct and can be an understatement. This paper explores the risk involved in Islamic banks and risk management practices by the Islamic banks. The focus of this paper is on risk and return in Bank Islam Malaysia Berhad (BIMB). The study examines the risk level in BIMB by using two approach; Financial Statement Analysis and Stock Analysis. Apart from that, this study also predicts the Islamic banks amount of financing for each concept in Malaysia for year 2010. The findings of this paper will assist Islamic banks as it will give a clear understanding about various types of risk in general and more particularly credit risk and market risk.

Keywords: Risk, Return, Islamic Banking

JEL Classification: G21

Suggested Citation

Bhatti, Ishaq and Misman, Faridah Najuna, Risks Exposure in Islamic Banks: A Case Study of Bank Islam Malaysia Berhad (BIMB) (June 30, 2010). Australian Centre for Financial Studies - Finsia Banking and Finance Conference 2010. Available at SSRN: https://ssrn.com/abstract=1632849 or http://dx.doi.org/10.2139/ssrn.1632849

Ishaq Bhatti

La Trobe University - School of Economics and Finance ( email )

Bundoora
Melbourne, 3086
Australia

Financial Research Network (FIRN)

C/- University of Queensland Business School
St Lucia, 4071 Brisbane
Queensland
Australia

HOME PAGE: http://www.firn.org.au

Faridah Najuna Misman (Contact Author)

Universiti Teknologi MARA (UiTM) - Faculty of Business and Management ( email )

Arau
Perlis, 02600
Malaysia

La Trobe University ( email )

Department of Accounting
Victoria 3552, 3086
Australia
+613 9479 5318 (Phone)
+613 9479 1654 (Fax)

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