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Cooperative and Islamic Banks: What can they Learn from Each Other?

In: International Perspectives on Participation

Author

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  • Saeed Al-Muharrami
  • Daniel C. Hardy

Abstract

Islamic and cooperative banks – including credit unions – are broadly similar in that they both share risk with savers. However, risk sharing goes along with ownership control in cooperatives, whilst Islamic banks share risk with borrowers also, and full downside risk with depositors. Islamic banking is consistent with mutual ownership, which may ease some of the governance and efficiency concerns implied byShari’ahconstraints. Greater risk sharing among cooperative bank stakeholders, along the lines of products offered by Islamic banks, may strengthen cooperatives’ financial resilience.

Suggested Citation

  • Saeed Al-Muharrami & Daniel C. Hardy, 2014. "Cooperative and Islamic Banks: What can they Learn from Each Other?," Advances in the Economic Analysis of Participatory & Labor-Managed Firms, in: International Perspectives on Participation, volume 15, pages 73-94, Emerald Group Publishing Limited.
    • Handle: RePEc:eme:aeapzz:s0885-333920140000015011
    DOI: 10.1108/S0885-333920140000015011
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    Citations

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    Cited by:

    1. Misbahul Munir & Maretha Ika Prajawati & Basir S., 2021. "Strategies of Sustainable Cooperative Partnerships," International Journal of Financial Research, International Journal of Financial Research, Sciedu Press, vol. 12(3), pages 157-161, May.

    More about this item

    Keywords

    Islamic banks; cooperative banks; credit unions; profit and loss sharing; G20; G21;
    All these keywords.

    JEL classification:

    • G20 - Financial Economics - - Financial Institutions and Services - - - General
    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages

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