TITLE

The Reality of the Application of Basel II Accord Requirements by Islamic Banks

AUTHOR(S)
Bouhaider, Roukia; Laraba, Mouloud
PUB. DATE
December 2010
SOURCE
Journal of King Abdulaziz University: Islamic Economics;Dec2010, Vol. 23 Issue 2, p1
SOURCE TYPE
Academic Journal
DOC. TYPE
Article
ABSTRACT
The banking system in general incorporates various risks that require taking precautions and adequate procedures to manage and control these risks according to the international best practice in order to mitigate potential risk exposures or avoid them. As a result of the increasing financial crisis in countries around the globe that resulted in the collapse of many reputable international banking institutions, which was a result of the inadequate managing and controlling their risks. In this context, the Basel II accords was introduced in the year 2006, and made a major impact on the banking supervision. Although major differences exist between Islamic and conventional banks, it is required for Islamic banks to cope with international banking standards and provide viable and safe banking grounds. Generally, this study has revealed that the two selected banks have: a capital adequacy ratio higher than the Basel Committee's minimum level of 8%, there are a growth intentions of risk management and required to comply with the standardized approach and measure risk exposure for capital adequacy. On the other hand most of the Islamic banks have a lot of problems in: calculating capital adequacy ratio, the supervisory review process and the market discipline. As in the case of all banks in emerging countries that are not fully capable of implementing Basel II accords, Islamic banks do not possess the adequate levels of core requirements for such practices, which reflect a negative outlook for the readiness to commit to Basel II requirements.
ACCESSION #
67067682

 

Share

Read the Article

Courtesy of THE LIBRARY OF VIRGINIA

Sorry, but this item is not currently available from your library.

Try another library?
Sign out of this library

Other Topics