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Enhancing Islamic Finance through Risk Benchmarking

The Capco Institute Journal of Financial Transformation, No. 38 (October 2013), pp.17-34

21 Pages Posted: 9 Oct 2013 Last revised: 17 Jul 2014

Rodrigo Zepeda

The Chartered Institute for Securities & Investment

Date Written: October 1, 2013

Abstract

This article argues that the development of a new specialist "risk benchmarking framework" for public and private Islamic BFIs operating regionally (excluding central banks), is the first and necessary step towards empirically proving a claim of Islamic finance superiority right. The development of a collaborative risk benchmarking framework for Western and Islamic banks and financial institutions (BFIs) would contribute to the enhancement of Islamic finance by: (i) contributing to enhancing the legitimacy of Islamic finance; (ii) enhancing risk management systems and practices in Islamic BFIs; and (iii) affording realistic opportunities for the offering of new Shari'ah compliant Islamic finance products. The article provides a high level analysis of the theoretical Islamic finance risk benchmarking operational framework.

Keywords: Islamic finance; Shari'ah; risk benchmarking; financial risk; banks and financial institutions; murabaha; mudaraba; musharaka; sukuk; ijara

Suggested Citation

Zepeda, Rodrigo, Enhancing Islamic Finance through Risk Benchmarking (October 1, 2013). The Capco Institute Journal of Financial Transformation, No. 38 (October 2013), pp.17-34 . Available at SSRN: https://ssrn.com/abstract=2337493

Rodrigo Zepeda (Contact Author)

The Chartered Institute for Securities & Investment ( email )

8 Eastcheap
London, EC3M 1AE
United Kingdom

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