24 Pages Posted: 1 Jul 2010
Date Written: June 30, 2010
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: 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
By Juan Solé