Risk Management Practices in the Republic of Yemen: Are Islamic Banks Different?

Journal of Islamic Economics, Banking, and Finance, 10 (3), 2014

24 Pages Posted: 1 Apr 2016

See all articles by Hussein Abdou

Hussein Abdou

The Lancashire School of Business & Enterprise; Department of Management, Faculty of Commerce, Mansoura University

Omar Musallam

University of Salford

Rifki Ismal

University of Indonesia (UI)

Date Written: April 22, 2014

Abstract

The main aims of this paper are, firstly, to investigate the extent to which Yemen’s banks, in particular its Islamic banks, are applying Risk Management Practices (RMPs) and related techniques to deal with various types of risk, and secondly, to compare and distinguish between the RMPs used in Islamic, national and foreign banks. Semi-structured interviews were conducted to identify the current RMPs in Yemen. The main research instrument was a questionnaire, divided into two sections. The first section covered the following five aspects: understanding risk and risk management, risk identification and analysis, risk monitoring, RMPs, and credit risk analysis. The second section consisted of four aspects: methods of risk identification, risk management, credit risk management, and types of risk. Multinomial regressions and other statistical tools were applied to determine whether there are differences between Islamic banks and other banks in Yemen. Our results revealed that there are significant differences between Islamic and national banks in terms of their understanding of risk and risk management, risk identification and analysis and credit risk analysis. However, there are no major differences found between national and Islamic banks in terms of risk management and RMPs. For Islamic and foreign banks, however, there are significant differences in terms of understanding risk and risk management and risk identification and analysis, but no differences between their risk management, RMPs and credit risk analysis.

Keywords: Risk Management, Islamic Banking, Multinomial Regression, Yemen

JEL Classification: G21; G32; E58

Suggested Citation

Abdou, Hussein and Musallam, Omar and Ismal, Rifki, Risk Management Practices in the Republic of Yemen: Are Islamic Banks Different? (April 22, 2014). Journal of Islamic Economics, Banking, and Finance, 10 (3), 2014. Available at SSRN: https://ssrn.com/abstract=2756764

Hussein Abdou (Contact Author)

The Lancashire School of Business & Enterprise ( email )

The Lancashire Law School
Corporation Street
Preston, PR1 2HE
United Kingdom
00441772894700 (Phone)

Department of Management, Faculty of Commerce, Mansoura University ( email )

Mansoura, 35516
Egypt

Omar Musallam

University of Salford ( email )

University of Salford
M5 4WT Salford, Lancashire M5 4WT
United Kingdom

Rifki Ismal

University of Indonesia (UI) ( email )

Jl. Prof. Sumitro Djojohadikusumo
Depok, DKI 16424
Indonesia

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