Analysis of Short-Term Asset Concentration in Islamic Banking
International Centre for Education in Islamic Finance (INCEIF)
October 8, 1987
IMF Working Paper No. 87/67
In general the process of implementation of Islamic banking in the Islamic Republic of Iran and Pakistan appears to be proceeding with relative success. However, number of problems have surfaced during the transition period, among which is a tendency for short-term assets to dominate commercial bank portfolios. The negative effects on capital formation is one result of this portfolio behavior. The cause of this behavior is a set of regulations constraining profit-sharing activities of commercial banks. It is shown here that such regulations rather than reducing the risks of bankruptcies in the banking system may well increase them.
Number of Pages in PDF File: 28
JEL Classification: 3120, 3140, 3116, 3131
Date posted: February 15, 2006