Online from: 1975
Subject Area: Accounting and Finance
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|Title:||Risk-return analysis of Islamic banks' investment deposits and shareholders' fund|
|Author(s):||Saiful Azhar Rosly, (International Centre for Education in Islamic Finance (INCEIF), Kuala Lumpur, Malaysia), Mohammad Ashadi Mohd. Zaini, (International Centre for Education in Islamic Finance (INCEIF), Kuala Lumpur, Malaysia)|
|Citation:||Saiful Azhar Rosly, Mohammad Ashadi Mohd. Zaini, (2008) "Risk-return analysis of Islamic banks' investment deposits and shareholders' fund", Managerial Finance, Vol. 34 Iss: 10, pp.695 - 707|
|Keywords:||Banking, Debt capital, Financial risk, Islam, Yield|
|Article type:||Research paper|
|DOI:||10.1108/03074350810891010 (Permanent URL)|
|Publisher:||Emerald Group Publishing Limited|
Purpose – The purpose of this paper is to study the differences or variance in the yields of Islamic and conventional bank deposits and capital, respectively, in view of their contractual differences, namely the former which is based on equity and the latter on debt.
Design/methodology/approach – The paper uses a financial ratio approach.
Findings – It was found that deposit yields in conventional banks were lower than return on equity (ROE), which truly reflect the contractual differences between fixed deposit and bank's capital. Also, it was found that Islamic banks' deposit yield and ROEs do not reflect their risk-taking properties, as their variances were found to be smaller.
Research limitations/implications – The paper adds to the literature on risk-return relationship in Islamic capital theory, which currently lacks theoretical studies.
Practical implications – The paper shows that increasing the level of risk taking in
Originality/value – Since both shareholders' capital and
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