RISK MANAGEMENT PRACTICES IN ISLAMIC BANKING INSTITUTIONS: A COMPARATIVE STUDY BETWEEN MALAYSIA AND INDONESIA

2016 ◽  
Vol 72 (12) ◽  
Author(s):  
Rashidah Abdul Rahman ◽  
Zuraeda Ibrahim ◽  
Achmad Tohirin ◽  
Aliyu Dahiru.Muhammad,Rossje Vitariamettawaty Suryaputri
Keyword(s):  
Risk Management ◽  
Comparative Study ◽  
Management Practices ◽  
Islamic Banking ◽  
Banking Institutions

Ar-Rahnu (Pawn-broking) in Al-Qamari Bank Berhad

2015 ◽  
Vol 5 (5) ◽  
pp. 1-6
Author(s):  
Aisyah Abdul-Rahman ◽  
A.M. Hafizi
Keyword(s):  
Risk Management ◽  
Learning Outcomes ◽  
Management Practices ◽  
Islamic Banking ◽  
Content Type ◽  
Postgraduate Students ◽  
Management Framework ◽  
Risk Management Framework ◽  
Banking Institutions ◽  
The Subject

Subjectarea The case is suitable for use in the topics related to the functions and roles of Islamic pawn-broking and the Islamic risk management framework. Studylevel/applicability The case is designed for undergraduate and postgraduate students taking courses in Islamic Banking, Islamic Finance and Risk Management for Islamic Banking Institutions. Case overview This case is meant to explain the mechanics of pawn-broking (Ar-Rahnu) in Islam as well as to understand the risk management of Ar-Rahnu in the bank. Ar-Rahnu is discussed, in general, from the perspective of muamalat and then is related to the financing service offered through Ar-Rahnu scheme at Al-Qamari Bank Berhad (a disguised bank). Ar-Rahnu means making an asset as a security or collateral for a debt. The collateral will be used to settle the debt when the debtor is in default. It may also be known as borrowing with either collateral or pawn-broking. In Al-Qamari Bank Berhad, gold and jewellery are the subject of collateral for Ar-Rahnu. In return, customers will get the cash based on the margin of loan with regards to the current market value of gold/jewellery as determined by the bank. The operation of Ar-Rahnu is discussed in Exhibit 1, while the risk management of Ar-Rahnu is discussed in Exhibit 2. Expectedlearning outcomes The learning outcomes include: to identify a problem and issue related to Ar-Rahnu; to evaluate the modus operandi of Ar-Rahnu; to analyze the risk management practices of Ar-Rahnu; and to develop decision criteria on whether Ar-Rahnu in Al-Qamari bank is Shariah-compliant or not. Supplementarymaterials Teaching notes are available for educators only. Please contact your library to gain login details or email [email protected] to request teaching notes.

scholarly journals Methodology on the Trend of Underlying Shariah Contracts and Legal Disputes of Decided Islamic Banking Cases in Malaysia

2019 ◽  
Vol 8 (3S3) ◽  
pp. 19-24
Keyword(s):  
Risk Management ◽  
Comprehensive Analysis ◽  
Legal Issues ◽  
Islamic Banking ◽  
Legal Research ◽  
Legal Risk ◽  
Banking Institutions ◽  
Phases Of Development ◽  
Court Process ◽  
Limited Scope

The general reflection of certainty and predictability in the decisions of the courts could be traced from the trend of decided Islamic Banking cases itself. Some studies highlighted the trend in decided Islamic Banking cases but not in detail, with a limited scope of discussion and did not cover the current and the latest decided cases. The objective of this paper is to provide a comprehensive analysis on the decided Islamic Banking cases in Malaysia of year 1987 to 2018 in order to find out the trend of underlying Shariah contract and legal disputes. The method employed in this study is the legal research through the analysis decided Islamic Banking cases in Malaysia. This paper highlights the underlying Shariah contracts that attract numerous judicial consideration and legal disputes in different phases of development in Islamic Banking cases. The diversification underlying Shariah contract and the complexity of legal issues could be traced in the more recent decided Islamic Banking cases. Moreover, the findings contribute to the enhancement of disputes resolution outcomes through court process and improvise the Shariah compliance and legal risk management of Islamic Banking Institutions

scholarly journals Governance and Risk Management: Empirical Evidence from Malaysia and

2016 ◽  
Vol 2 (3) ◽  
pp. 21
Author(s):  
Siti Balqis Noor ◽  
Rashidah Abdul Rahman ◽  
Tariq Ismai
Keyword(s):  
Risk Management ◽  
Board Of Directors ◽  
Management Practices ◽  
Islamic Banking ◽  
Management Process ◽  
Islamic Banks ◽  
Management Culture ◽  
Risk Management Process ◽  
The Board Of Directors ◽  
Supervisory Boards

<p>The perceptions of Islamic banking professionals are surveyed through a questionnaire to explore whether the process of risk management mediates board involvement in risk management and risk management practices of Islamic banks in Malaysia and Egypt. The findings of this study identified that the Islamic banks in the selected countries are somewhat efficient in their risk<br />management process. It was noticed that board involvement in risk management, process of risk management and risk management<br />among Islamic banks in Malaysia are significantly higher than their counterparts in Egypt. Furthermore, high involvement of boards in risk management significantly increases the risk management process, and in turn, leads to significantly higher risk management practices in Islamic banks. Hence, boards should take formal responsibility for setting, managing and periodically<br />assessing the risk management culture of the banks. It is expected that the outcomes of this study would help policy setters in the selected countries to develop a well-structured and harmonized risk management process that enhance risk management practices, with emphasis on the effective involvements of the board of directors and Shari’ah supervisory boards in risk management<br />practices.</p>

scholarly journals Risk management practices and attitude of Pakistani Islamic banking system employees

2013 ◽  
Vol 7 (33) ◽  
pp. 3202-3211 ◽  
Author(s):  
Azeem Khattak Naveed ◽  
Khashif Ur Rehman ◽  
Ullah Wasim ◽  
Ullah Majeed
Keyword(s):  
Risk Management ◽  
Management Practices ◽  
Banking System ◽  
Islamic Banking

scholarly journals Governance and Risk Management

2013 ◽  
Vol 2 (3) ◽  
pp. 21-33 ◽  
Author(s):  
Siti Balqis Noor ◽  
Rashidah Abdul Rahman ◽  
Tariq Ismai
Keyword(s):  
Risk Management ◽  
Board Of Directors ◽  
Management Practices ◽  
Islamic Banking ◽  
Management Process ◽  
Islamic Banks ◽  
Management Culture ◽  
Risk Management Process ◽  
The Board Of Directors ◽  
Supervisory Boards

The perceptions of Islamic banking professionals are surveyed through a questionnaire to explore whether the process of risk management mediates board involvement in risk management and risk management practices of Islamic banks in Malaysia and Egypt. The findings of this study identified that the Islamic banks in the selected countries are somewhat efficient in their risk management process. It was noticed that board involvement in risk management, process of risk management and risk management among Islamic banks in Malaysia are significantly higher than their counterparts in Egypt. Furthermore, high involvement of boards in risk management significantly increases the risk management process, and in turn, leads to significantly higher riskmanagement practices in Islamic banks. Hence, boards should take formal responsibility for setting, managing and periodically assessing the risk management culture of the banks. It is expected that the outcomes of this study would help policy setters in the selected countries to develop a well-structured and harmonized risk management process that enhance risk management practices, with emphasis on the effective involvements of the board of directors and Shari’ah supervisory boards in risk management practices.

Islamic Cross Currency Swap (ICCS): hedging against currency fluctuations

2015 ◽  
Vol 5 (4) ◽  
pp. 1-12
Author(s):  
Aisyah Abdul Rahman ◽  
Raudha Md Ramli
Keyword(s):  
Risk Management ◽  
Learning Outcomes ◽  
Undergraduate Students ◽  
Subject Area ◽  
Islamic Finance ◽  
Islamic Banking ◽  
Modus Operandi ◽  
Content Type ◽  
Banking Institutions ◽  
Finance Officer

Subject areaThe case is suitable for use in the topics related to the functions and roles of hedging and the Islamic derivatives/hedging instruments.Study level/applicabilityThe case is designed for undergraduate students, taking courses in Islamic Banking, Islamic Finance and Risk Management for Islamic Banking Institutions.Case overviewThis case describes the theory and application of Islamic Cross Currency Swap (ICCS) in the market. Having this understanding enables case analysts to understand the functions and roles of hedging and the Islamic derivatives or hedging instruments of ICCS comprehensively. The case begins with Yusof, the new finance officer of Al-Yemeni Sdn. Bhd to analyse the permissibility of hedging and derivatives to hedge against currency fluctuations from Islamic perspective. Yusof had to complete the report before the Board of Director's quarterly meeting, which was within a week. Having in mind that the company's mission was to be a Shariah-compliant stock by 2012, Yusof was responsible for ensuring that the company was administrated in an Islamic way. Besides, he also had to ensure that the company generated income and profit as planned. In doing so, he had to strategise all possible risk exposures that could be mitigated or hedged. This case ends by giving the case analyst information on ICCS offered by Al-Rizky Bank Berhad (ARBB). In this case, Yusof had to find out whether hedging is allowed in Islam. What are the Islamic derivatives? What are the different views of Shariah scholars on various types of derivatives? What is themodus operandiof ICCS? Is the ICCS offered by ARBB Shariah compliant? What are the possible risk exposures being hedged in ICCS?Expected learning outcomesTo provide exposure on the concepts of hedging from Islamic perspectives; to provide exposure on the concepts of Islamic derivatives/Islamic hedging instruments; to stimulate understanding on themodus operandiof ICCS in ARBB; and to help case analysts understand what makes the Islamic hedging instruments become Shariah compliant.Supplementary materialsTeaching notes are available for educators only. Please contact your library to gain login details or [email protected] request teaching notes.

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