IMF Working Papers Volume 2020 Issue 156: The Nature of Islamic Banking and Solvency Stress Testing

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The Nature of Islamic Banking and Solvency Stress Testing - Conceptual Considerations

Author:

Andreas Jobst

Andreas Jobst
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Mr. Juan Sole

Mr. Juan Sole
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Series:: IMF Working Papers

Volume/Issue:: Volume 2020: Issue 156

Publication Date:: 07 Aug 2020

DOI:: https://doi.org/10.5089/9781513550886.001

ISBN:: 9781513550886

ISSN:: 1018-5941

Pages:: 77

Keywords:: WP; stress testing; Islamic banking; Islamic finance principles; capital adequacy; shari’ah compliance.; Islamic bank; rate of return; market risk; operating income; interest rate; deposit base; financial system; asset performance; liabilities consist; Market risk; Credit risk; Islamic finance; Global; Middle East and Central Asia; Southeast Asia; Africa; counterparty risk of a bank; DCR bank; investment risk reserve; investment risk; counterparty risk; asset impairment; E. market risk

Legal-disclaimer:: IMF Working Papers describe research in progress by the author(s) and are published to elicit comments and to encourage debate. The views expressed in IMF Working Papers are those of the author(s) and do not necessarily represent the views of the IMF, its Executive Board, or IMF management.

Series:: IMF Working Papers

Volume/Issue:: Volume 2020: Issue 156

Language:: English

Publication Date:: 07 Aug 2020

DOI:: https://doi.org/10.5089/9781513550886.001

ISBN:: 9781513550886

ISSN:: 1018-5941

Pages:: 77

Keywords:: WP; stress testing; Islamic banking; Islamic finance principles; capital adequacy; shari’ah compliance.; Islamic bank; rate of return; market risk; operating income; interest rate; deposit base; financial system; asset performance; liabilities consist; Market risk; Credit risk; Islamic finance; Global; Middle East and Central Asia; Southeast Asia; Africa; counterparty risk of a bank; DCR bank; investment risk reserve; investment risk; counterparty risk; asset impairment; E. market risk

Legal-disclaimer:: IMF Working Papers describe research in progress by the author(s) and are published to elicit comments and to encourage debate. The views expressed in IMF Working Papers are those of the author(s) and do not necessarily represent the views of the IMF, its Executive Board, or IMF management.

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This paper provides a conceptual overview of key aspects of the design and implementation of solvency stress testing of Islamic banks. Based on existing regulatory standards and prudential practice, the paper explains how Islamic finance principles and their impact on various risk drivers affect the capital assessment of asset-oriented financial intermediation under stress. The formal specification of these risk factors helps operationalize and integrate the stress testing of Islamic banks within established frameworks for financial stability analysis.

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IMF Working Papers

ISSN:: 1018-5941

Publisher:: International Monetary Fund

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