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Risk management tools practiced in Islamic banks: evidence in MENA region

Rim Ben Selma Mokni (Faculty of Management Sciences and Economics, El-Manar University, Tunis, Tunisia)
Abdelghani Echchabi (International Islamic University Malaysia, Kuala Lumpur, Malaysia)
Dhekra Azouzi (Faculty of Management Sciences and Economics, El-Manar University, Tunis, Tunisia)
Houssem Rachdi (Faculty of Law, Economics and Management of Jendouba, University of Jendouba, Jendouba, Tunisia)

Journal of Islamic Accounting and Business Research

ISSN: 1759-0817

Article publication date: 8 April 2014

3984

Abstract

Purpose

The main purpose of this study is to investigate in detail the way each risk is being measured and managed by Islamic banks in the MENA region.

Design/methodology/approach

This research attempts to examine the perceptions of Islamic bankers about the importance of transparency and public disclosure in the understanding of the bank's risk profile. It covers 23 Islamic banks located in the MENA region using self-administered questionnaire.

Findings

The results show that there are differences in the level of risk perception across funding modes. Also Islamic banks use extensively the traditional tools in mitigating risk.

Practical implications

The paper discusses and analyses the current practices employed in the risk management of Islamic banks. It identifies the tools and methods used in managing credit risk, market risk, liquidity risk and operational risk by Islamic banks.

Originality/value

This study aims to extend the existing literature in two ways. First, this paper contributes to the dearth of studies on examination of tools practiced in the risk management by Islamic banks located in the MENA region. Next, this work integrates the methods used in the management of liquidity risk that have not been studied earlier.

Keywords

Citation

Ben Selma Mokni, R., Echchabi, A., Azouzi, D. and Rachdi, H. (2014), "Risk management tools practiced in Islamic banks: evidence in MENA region", Journal of Islamic Accounting and Business Research, Vol. 5 No. 1, pp. 77-97. https://doi.org/10.1108/JIABR-10-2012-0070

Publisher

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Emerald Group Publishing Limited

Copyright © 2014, Emerald Group Publishing Limited

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