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Analysis of Short-Term Asset Concentration in Islamic Banking

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  • Mirakhor, Abbas

Abstract

In general the process of implementation of Islamic banking in the Islamic Republic of Iran and Pakistan appears to be proceeding with relative success. However, number of problems have surfaced during the transition period, among which is a tendency for short-term assets to dominate commercial bank portfolios. The negative effects on capital formation is one result of this portfolio behavior. The cause of this behavior is a set of regulations constraining profit-sharing activities of commercial banks. It is shown here that such regulations rather than reducing the risks of bankruptcies in the banking system may well increase them.

Suggested Citation

  • Mirakhor, Abbas, 1987. "Analysis of Short-Term Asset Concentration in Islamic Banking," MPRA Paper 56029, University Library of Munich, Germany.
    • Handle: RePEc:pra:mprapa:56029
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    References listed on IDEAS

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    Cited by:

    1. Šeho, Mirzet & Bacha, Obiyathulla Ismath & Smolo, Edib, 2020. "The effects of interest rate on Islamic bank financing instruments: Cross-country evidence from dual-banking systems," Pacific-Basin Finance Journal, Elsevier, vol. 62(C).
    2. Hassan, M. Kabir & Farhat, Joseph & Al-Zu'Bi, Bashir, 2003. "Dividend Signaling Hypothesis And Short-Term Asset Concentration Of Islamic Interest-Free Banking," Islamic Economic Studies, The Islamic Research and Training Institute (IRTI), vol. 11, pages 2-30.
    3. Giorgio Gomel & Angelo Cicogna & Domenico De Falco & Marco Valerio Della Penna & Lorenzo Di Bona De Sarzana & Angela Di Maria & Patrizia Di Natale & Alessandra Freni & Sergio Masciantonio & Giacomo Od, 2010. "Islamic finance and conventional financial systems. Market trends, supervisory perspectives and implications for central banking activity," Questioni di Economia e Finanza (Occasional Papers) 73, Bank of Italy, Economic Research and International Relations Area.
    4. Khaled, Shafi A. & Khandker, A.Wahhab, 2017. "Determination of Mark-Up Rate under Zero-Interest Financial System: A Microeconomic Approach," Islamic Economic Studies, The Islamic Research and Training Institute (IRTI), vol. 25, pages 15-34.

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    More about this item

    Keywords

    Islamic banking; short-term assets; profit-sharing;
    All these keywords.

    JEL classification:

    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages
    • P44 - Political Economy and Comparative Economic Systems - - Other Economic Systems - - - National Income, Product, and Expenditure; Money; Inflation

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