revised thesis data

8/9/2019 Revised Thesis Data

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RISK MANAGEMENT COMPARISON OF ISLAMIC AND CONVENTIONAL

BANKS IN PAKISTAN

TABLE OF CONTENT

Contents

ABSTRACT........................................................................................................................1

Acknowledgments..............................................................................................................2

Chapter 1: Introduction......................................................................................................3

Background........................................................................................................................3

Research Statement..........................................................................................................

!urpose o" stud#................................................................................................................

$%&ecti'e............................................................................................................................

Signi"icance o" the stud#....................................................................................................

Chapter 2: (iterature re'iew..............................................................................................)

Risks *anagement in con'entional %anks........................................................................)

Risks *anagement in Islamic %ank...................................................................................+

Risks *anagement comparison o" Islamic and con'entional %anks...............................12

Chapter 3: *ethodolog#..................................................................................................1

*ethodolog#....................................................................................................................1

Sample selection.............................................................................................................1

,ata collection and -uestionnaire...................................................................................1)

,ata anal#sis...................................................................................................................1)

Relia%ilit# o" the measures..............................................................................................1

2


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Chapter /: Anal#sis..........................................................................................................10

Awareness o" the Risk managers a%out 'arious t#pe o" Risk o" the Bank along with

measurement le'el..........................................................................................................10

Awareness o" the di""erent t#pe o" the risk identi"ication techniue plus it measurement

le'el..................................................................................................................................23

ercise o" di""erent risks management techniue and the "reuenc# o" the uses.........2)

Awareness regarding risk mitigation approaches 4 acceptances le'el..........................2+

Awareness o" risk mitigation techniues 4 measurement...............................................31

Attitude o" management towards risk management practices........................................33

Conclusion.......................................................................................................................3

Re"erences.......................................................................................................................3)

Anneure 5 -uestionnaire................................................................................................3+

3


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ABSTRACT

The study was conduct to fnd out the comparison o Risk management

practices o Islamic and conventional banks operating in Islamic Republic o

Pakistan. lose ended !uestioner is used or data collection which covers the

ollowing aspects" awareness and measurement level o risk and risk

identifcation techni!ues# risk mitigation approaches# and risk mitigation

techni!ues# use o risk management techni!ues and management attitude

toward practices regarding risk management. $ata is collected rom ten

banks and one respondent rom the risk management department rom each

o the selected banks. %re!uency tabulation is use or the analysis and

ronbach&s alpha is use or reliability o the collected data. %inding o the

study was that there is di'erence between the two banking system

awareness regarding di'erent kind o risk# risk identifcation techni!ues and

risk mitigation techni!ues and approaches. Islamic banks are less aware as

compared to conventional banks. (nd di'erence ound in the use o

mitigation techni!ues also. Islamic banks use only traditional techni!ues and

conventional banks use advance techni!ues beside the use o traditional

techni!ues. Islamic banks sta' are not that much !ualifed like conventional

banks. The research is benefcial or und manager# depositor and especially

or Islamic banks.

)


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Acknowledgmen!

(ll praise is due to (lmighty *(++(,-# the most merciul and the most

benefcent# ,/ bestowed upon us health# power o communication and

opportunity to successully complete our undergraduate studies. ountless

salutation is upon the ,oly Prophet *,a0rat 1uhammad- Peace e upon

,im4# the most perect and torch o guidance and knowledge or humanity as

a whole.

e eel honored to e5press our sincere gratitude to 1r. 1uhammad 6amran

or his supervision# guidance and encouragement throughout this research.

e always ound him very much alive# ull o 0eal# vitality and intellectual

curiosity. ithout his ideas# remarks and endless interest this work could not

have been carried out and completed.

7


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C"APTER #$ INTROD%CTION

# BACKGRO%ND TO T"E ST%D'

Risk management is one o the building blocks or banking sector. 8ow a

day&s all the banks are acing di'erent kind o risk because o the volatility in

the environment such as li!uidity risk# credit# market# interest rate and

oreign e5change risk so such kind o risks create di9culties in the successesand survival o the banking sector. Risk management e9ciency is

absolutely re!uired .arey 2::;4 says that risks management is very

essential or fnancial institution as compared to other part o the business

environment. The main unction o the fnancial institution is to ma5imi0e the

revenue as well as increase the value o the share or shareholder by

providing di'erent fnancial services and take care o the risk. (s we know

that risk is able to be classifed into unsystematic and systematic risk.


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survey suggests that orty @ o the respondent are knew that signifcance o

risk management is commonly understood throughout their organi0ation and

suggestion was to build and improve the culture o the risk management.

The e'ect o 2::A fnancial crisis was on both fnancial and nonBfnancial

sector and because o this every organi0ation want to increase risk

management practices. Initially fnancial organi0ation meet regulatory

re!uirement or risk measurement and they were wrong to think meeting

regulatory re!uirement is the only solution or risk management. In the

practices o risk management there are mainly three aspects risk

identifcation" risk measurement and mitigation o the risk. (ll these aspects

are di'erent in interest based banking system and interest ree bankingsystem. ecause o one system is totally dependent on interest and other

one is totally independent. In interest ree economic system the concept o

risk is also di'erent. Risk is viewed rom 2 dimensions. Charar uncertainty4

is prohibited and there will be reedom in contract. In interest based

economic system there are no restrictions. (nd depositors are also not bound

to share the risk on the other side the proft and loss will be share which

mean share the risk. Practices o the risk management are widely

investigated throughout the world but in the emerging banking sector like in

Islamic bank system is very small or appro5imately 0ero. In Islamic Republic

o Pakistan Islamic banking is also important part o the economy and also in

the development stage. Thereore the researcher needs to fnd out the gap

between both the Islamic and nonBIslamic system operating in Islamic

republic o Pakistan in term o risk management practices.

# RESEARC" STATEMENT

To investigate omparison o Risk 1anagement Practices between Islamic

and conventional anks in Pakistan.

>


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#&( P%RPOSE OF ST%D'

The purpose o the study is to compare risk management practices o

interest based and interest ree banking operating in Islamic republic o

Pakistan.

#&) OB*ECTIVE

To fnd out the awareness o banks employee acing various types o risk

and management techni!ues# (ttitude o bank personnel toward risk

management practices# +evel o risk management practices along with

di'erent methods o identifcation and mitigation o risk.

#&+ SIGNIFICANCE OF ST%D'

The analysis and Results o the study is useul or banking sector especially

or Islamic banking operating in Islamic Republic o Pakistan and also helpul

or the uture study.

C,-.e/ ($ L0e/-1/e /e20ew

R0!k! M-n-gemen 0n con2en0on-l 3-nk!

The process by which we frst o all identifed the risk# then in 2nd stage

being fnancial manager we assessed that identifed risk in 3 rd stage we

measured that risk and then managed that risk or creating economical

value are called fnancial risk management. Dorion# 2:;: 4.


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ine9ciency# market power# capital ratio and net interest margin are variables

that clariy credit risk.


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ang2::)4 conducted a study on world diversifcation and oreign e5change

risk. Fmpirical results o the study suggested that oreign e5change risk is a

high priced. In addition# the diverse world has proven to help global

portolios. These results suggest that e5change rate risk Taiwanese

investment includes valid seek international diversifcation

Tamimi 2::24 e5amines the e5tent to which commercial banks in the Gnited

(rab Fmirates use technical risk management in the treatment o various

types o risks. (ccording to the result o the study# the commercial banks o

Gnited (rab Fmirates were su'ering rom credit risk. ( study showed check

up by the fnancial statement analysis and branch manager were the main

methods used to identiy risks. (ccording to this study the main techni!ueused in risk management to establishment o standards# credit worthiness

analysis# credit score# collateral and risk rating# the study as well shows the

commitment o the Gnited (rab Fmirates commercial banks# to use the most

modern techni!ues o risk management# The ommittee suggested the

implementation o a conservative credit policy.

(lBTamimi# E (lB1a0rooei2::>4 e5amined one o the good studies about risk

management in which they compared the risk management practice o thenational and oreign banks o Gnited (rab Fmirate. The main aim o this

study was to measure the !uantity to which the Gnited (rab Fmirate banks

e5ercise practices o management along with their techni!ues to deal with

di'erent kinds o risk and the second aim was to weigh against the practices

o risk management between national and oreign banks o Gnited (rab

Fmirate. In this study the authors developed !uestionnaire and divided into 2

parts. ;st part covers ? aspects which are understood risk and risk

management" credit risk analysis" risk assessment and analysis" risk

management practices" risk monitoring and risk identifcation and frst

component include close ended orty three !uestions on an interval base.

The 2ndpart is based on an ordinal scale and consists o two !uestions# which

are to deal with risk identifcation# and risks acing the sample banks. The

;:


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fndings o the study were three kinds o risks aced by the Gnited (rab

Fmirate commercial banks# which were operating risk# credit risk# and mostly

%oreign F5change risk. In terms o e9ciency Gnited (rab Fmirate banks is

very e9cient in managing risk# and risk identifcation and risk assessment

and analysis are the most inJuencing variables in risk management

practices. Result showed that there is a signifcant di'erence between the

practices o risk management o Gnited (rab Fmirate %oreign and 8ational

anks.


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Risk 1anagement defned the need to identiy the important risks# the

method o measuring the risk o the development o consistent and accurate#

better the importance o risk reduction# prevention# and transer through the

calculation o riskBweighted return and appropriate control procedures risk

situation o the company. %or banks# the regulatory response is not essential

to avoid bankruptcy or fnancial harassment. ank sta' re!uires reliable

identifcation# risk measurement and management# pursue cultural and

monitor the best riskBreward ratio.

In Islamic theory# the term risk is also common. To understand this concept

o Islamic standpoint# we need to pull together the two dimensions o riskB

taking without any permission and inormation o contract withoutacceptance o Islamic law. Gncertainty regarding the acts should by

contractual arrangement results suspects are covered. %or e5ample# the

contractual obligation o the supplier# where the supplier is to deliver a

product# but not in the position o the product means the contract invalid.

8evertheless# i the obKect is in its essence nonBe5istent at the time o the

contract# the contract will be valid in certain specifc cases# or e5ample# ai


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community prohibit us clearly rom gambling# as shown in these verses (lB

a!ara# verse 2;=


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are very e9cient in managing risk where R(( and RI are the most inJuencing

variables in R1Ps. The results show evidence o e9ciency in the treatment o

credit risk Islamic banking system in runei $arussalam.

6halid E (mKad 2:;24 conduct the study about the practice o risk

management and techni!ues deal with di'erent kind o risk in interest ree

banks o Pakistan.


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ainol E


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management# wellBorgani0ed risk recognition# credit risk analysis# risk

monitoring and risk assessment analysis. Islamic banks were considerably

di'erent as compared to the conventional banks# understand the risk and

risk management. $i'erent levels o risk countered by interest ree banks

were drastically superior to the degree o risk aced by conventional banks.


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only fve ullBJedge Islamic banks are operating in Pakistan %or comparison o

risk management practices fve ullBJedge Islamic banks are selected and or

keeping the balance fve conventional are also selected and that selection o

conventional was based on random sampling method. /nly privates banks

are selected because ull Jedge Islamic public banks are not yet establish in

Islamic Republic o Pakistan.

T,e !eleced 62e 41ll78edged I!l-m0c P/02-e! 3-nk! -/e9

; 1ee0an ank#

2 ankIslami ank.

3 $ubai Islamic ank

) $awood Islamic ank

7 (lBbarka Islamic ank

Ine/e! 3-!ed o/ con2en0on-l 3-nk! -/e9

; ank (lalah limited

2 ,abib ank limited

3 Gnited bank limited

) %aysal bank limited

7 (llied bank limited

D-- collec0on -nd :1e!0onn-0/e

Primary data is used or data collection structure closed end !uestioner is

used or the study. Ouestioner is take rom the study o ,u!# (0ad# E

Rahman# 2:;: and !uestioner contains ;:3 closed ended !uestions design

on ordinal and nominal scales and these !uestions are based to understand

three aspects o risk management practicesL understanding risk and risk

management" risk identifcation" risk assessment and analysis" risk

measurement and risk mitigation practices. Person involved with risk

;>


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management activity rom each o the selected bank is re!uired or data

collection.

D-- -n-l5!0!

ronbach&s alpha is used or evaluating reliability through this deviation will

be measured o the answers o respondents within a scale. Gse o re!uency

table is very common beside the re!uency table correlation analysis is also

part o the analysis o the study.

Rel0-30l05 o4 ,e me-!1/e!

%or measuring the internal consistency o the !uestion the researcher need

ronbach&s (lpha. ith the use o ronbach&s (lpha measuring o error is not

a di9cult task actually ronbach&s (lpha is simply coe9cient o reliability# or

consistency4 it is not a statistical test. oe9cient greater or e!uivalent to

:.>4 is up to standard 8unnally# ;=>A4. The !uestionnaire consists o ;:3

!uestions and the reliability among them is .>3?4 which is good result mean

acceptable

Rel0-30l05 S-0!0c!

ronbachMs (lpha 8 o Items

.>3? ;:3

;A


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C,-.e/ +$ An-l5!0!

The outputs o the !uestionnaires are sub sectioned in the ollowing heading

Aw-/ene!! o4 ,e R0!k m-n-ge/! -3o1 2-/0o1! 5.e o4 R0!k o4 ,e

B-nk -long w0, me-!1/emen le2el

Table ; communicate that there are little di'erences between the two set

o the banks as regards the understanding o di'erent types o risks. There is

same awareness o InvestmentQredit# /perationalQ Perormance# +i!uidity#

Fnvironmental and Rate o Return Risks but regarding other type o risk like

interest rate # sharia noncompliance risk and price risk there is hugedi'erence between the two di'erent banking system awareness and also

little bit di'erence e5ist in oreign e5change risk. These results are almost

same like the pervious study ,u!# (0ad# E Rahman# 2:;: T-3le ;#$

Aw-/ene!! o4 d0


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R0!k Tec,n0=1e! Islamic anks > onventional a

redit RiskQ Investment Risk 7 ;:: 7

+i!uidity Risk 7 ;:: 7Interest Rate Risk : : 7

%oreign F5changeQ urrency

Risk

) A: 7

PerormanceQ /perational

Risk

7 ;:: 7

Fnvironmental Risk 7 ;:: 7

Rate o Return Risk 7 ;:: 7


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Risk

Fnvironment

al Risk

): ;:: ):

Rate o Return Risk

): ):


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Conce/nedne!! /eg-/d0ng d0


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y Risk

Interes

t Rate

Risk

;:: ;:

:

%oreign

F5chan

geQ

urren

cy Risk

2: ): ?: A:

Peror

manceQ

/perat

ional

Risk

A: 2:

Fnviro

nment

al Risk

?: 2: 2: A: 2:

Rate o

Return

Risk

?: 2: 2: ?: 2: 2:


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Aw-/ene!! o4 ,e d0


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enchmarking ; 2: ; 2:


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the

bank

risk

manag

er

:

(udits

or

physica

l

inspecti

on

;:

:

;::

%inanci

al

statem

ent

analysi

s

;:

:

;::

Risk

survey

2: 2: 2: 2: ): 2: ?:

Process

analysi

s

?: ;: ): ): ):


26/54

ench

markin

g

2: 2: 2: A: ?:


27/54

management techni!ues and the same case or credit committees. The use

o risk adKusted return is very high ;:: @4 also in conventional banks and

very low only 2: @ in Islamic banks. The pervious study result di'erences

are di'erence in case o duration analysis# value at risk# gap analysis and

redit committee use in Pakistan is very high with comparison o angladesh

study conducted by ,u!# (0ad# E Rahman# 2:;:4 and remaning variable

reluts are almost same.

T-3le +$ %!e o4 /0!k m-n-gemen ec,n0=1e!

Type o risk Islamic

anks

@ onventional

anks

@

redit Ratings 7 ;:: 7 ;::

Cap (nalysis 7 ;:: ) A:


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In the 2ndtable o )4 is regarding the using re!uency o the management

techni!ues in the previous table ).2. The results show that the using

re!uency o both o the banking system is di'erent. Islamic bank use

management techni!ues most o the time and re!uently but in conventional

banks is note case like that they are not stuck to re!uently or mostly but

they rarely use most o the techni!ues e5cept credit scoring and credit

committees mostly use by all o the respondents o the sample. Results are

almost same with ,u!# (0ad# E Rahman# 2:;:4.

(ccording to the fnding our study there is gap between the two sets o so

our 3rd hypothesis is also proved ,3. There is a gap between the interest

based and interest ree banks in the understanding o risk and riskmanagement practices.

T-3le +&($ F/e=1enc5 o4 1!e /0!k m-n-gemen ec,n0=1e!

Type

o

Risk

1ostly used %re!uently

used

8eutral Rarely used 8ot at all

aware

Isla

mic

conve

ntiona

l

Isla

mic

conve

ntiona

l

Isla

mic

conve

ntiona

l

Isla

mic

conve

ntiona

l

Isla

mic

conve

ntional

redit

Ratin

gs

;:

:

2: A:

Cap

(naly

sis

2: 2: ?: ?: 2: 2:


29/54

sis

$urati

on

(naly

sis

A: 2: 2: A:

1atur

ity

1atch

ing

2: 2: A: A:

Farni

ng atrisk

2: 2: 2: ?: ):

alue

at risk

?: ?: ): ):


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syste

m

redit


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Risk may be avoided ) A: ; 2:

Risk may be retained ; 2: 7 ;::

Risk may be

transerred

3

?:

7

Risk may be shared 2 ): 7 ;::

Risk may be reduced 7

;::

7 ;::

In the table 7b4 the result shows that level o use o risk mitigations

approach is very high in Islamic banks as compared to conventional banks

like in case risk avoidance ?: @ o Islamic banks are only agree to use this

approach and on the other hand no one use this approach. 2: @ o

respondent are only agree to use risk retaining approach in conventional

banks but not at all in Islamic banks. In case transerring and sharing the

risks ): @ respondent o the Islamic banks are highly agree to use but no

one rom the conventional banks. %or risk reduction mitigation approach A:

@ o the respondents use in Islamic banks and only 2: @ o the respondent

use in conventional banks are highly agreed.


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c l c l c l c l c l

Risk

may be

avoided

?: 2: 2: ;::

Risk

may be

retaine

d

2: 2: ): ):

Risk

may be

transerred

): ): ): 2: ?:

Risk

may be

shared

): 2: ?: A:

Risk

may be

reduced

A: 2: 2: 2: ?:

Aw-/ene!! o4 /0!k m00g-0on ec,n0=1e! @ me-!1/emen

Table ? communicates regarding the awareness o mitigation techni!ues.

oth set o the banks are ;:: @ aware about collateral arrangement# loan

loss reserves and guarantees o mitigation techni!ues. Third party

enhancement techni!ues o mitigation awareness are A: @ in conventional

banks and ?: @ in Islamic banks. /n balance sheet netting awareness are A:

@ in Islamic banks and ): @ in conventional banks. Parallel contracts

awareness in Islamic banks is 2: @ and in conventional the awareness about

parallel contract is ;:: @ which mean that all o the respondents are aware.

33


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/ver the counter derivatives techni!ues o mitigation awareness is ;:: @ in

conventional banks and A: @ in Islamic bank. (long with the whole

conse!uence shows that the interests ree banks are less aware regarding

the risk mitigation techni!ues as compared to the nonBIslamic banks.

T-3le $ Aw-/ene!! o4 /e!.onden! -3o1 /0!k m00g-0on ec,n0=1e!

Risk Techni!ues Islamic anks @ onventional anks @

ollateral

(rrangement

7 ;:: 7 ;::

Third party

enhancement

3 ?: ) A:

+oan loss reserves 7 ;:: 7 ;::

/n balance sheet

netting

) A: 2 ):

Cuarantees 7 ;:: 7 ;::Parallel contracts ; 2: 7 ;::

/ver the ounter

derivatives

) A: 7 ;::

Table ?.2 communicate the level o using the risk mitigation techni!ues. (ll

the respondents highly use collateral arrangement in conventional banks and

in Islamic A: @ o the respondents highly use collateral arrangement. Third

party enhancement is highly use in interest ree banks as compared to

interest based banks along with the same case is or loan loss reserves

highly use in interest ree banks as compared to interest based banks. The

using level o on balance sheet netting conventional is neutral and rom

3)


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Islamic side maKority o respondents are not uses on balance sheet netting.

The uses o guarantee in Islamic is very high all o the respondent use it and

on the other hand conventional banks are using it neutrally. Parallel contract

are highly use by interest ree banks as compared to interest based banks.


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/n

balance

sheet

netting

): 2: ?: ): 2: 2:

Cuarant

ees

;:

:

;::

Parallel

contrac

ts

2: ;:: A:

/ver

theounter

derivati

ves

2: ?: A: ?:

A01de o4 m-n-gemen ow-/d! /0!k m-n-gemen ./-c0ce!

Table >4 communicates about the management attitude toward the ollowing

types o risk. The entire respondent o both o the banks attitudes toward

credit risk is very high. In case o li!uidity rom Islamic banks all o the

respondents are highly positive but on the other hand conventional banks

management are not that much positive about li!uidity risk management. In

case o interest rate conventional banks are positive to manage it or Islamic

there is no need o interest rate management because they are not based on

interest they run interest ree banking system. Islamic banks managementare highly positive or perormance risk A: @ o the respondent are highly

positive on the other hand 2: @ are only positive or perormance risk . 2: @

Islamic banks management attitude toward oreign e5change risk are highly

positive and conventional banks management attitude toward risk

management is not that much positive.


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management are more highly positive towards risk management practice

and on the other hand conventional banks management attitude are not that

much highly positive toward risk management practices like Islamic banks.

ith the comparison o pervious study di'erence occurred in case o oreign

e5change risk in angladesh the management attitude toward oreign

e5change risk is high as compared to Pakistan. /ther results are same.

T-3le $ A01de o4 M-n-gemen ow-/d! /0!k m-n-gemen

./-c0ce!

Type o

Risk

,ighly

Positive

/nly

Positive

8eutral 8egative ,ighly

8egative

Isla

mi

c

conve

ntiona

l

Isla

mi

c

conve

ntiona

l

Isla

mi

c

conve

ntiona

l

Isla

mi

c

conve

ntiona

l

Isla

mi

c

conve

ntiona

l

redit

Risk

;:

:

;::

+i!uidit

y Risk

;:

:

?: 2: 2:

Interest

Rate

Risk

2: ): ): ;:

:

%oreign

F5chan

ge Risk

2: ): ?: 2: ): 2:

Perorm

ance

Risk

A: 2: 2: A:

3>


37/54

Concl1!0on

The fnding o the study concludes that there is variation between the two

systems in term o awareness o risk identifcation# mitigation and

management techni!ues. %or risk identifcation conventional banks are more

aware than Islamic banks and conventional banks use advance techni!ues

or risk identifcation beside the traditional techni!ues o risk identifcation

and on the other hand Islamic banks use only traditional techni!ues or

identifcation o risk and they need to come up with the advance techni!ues

which is benefcial or uture because banking industry is develop with

passage o time and such traditional techni!ues lead them to ailure. Islamic

banks need !ualifed sta' also or risk management department because

maKority o them are unaware about the advance techni!ues. In case o the

approaches o risk mitigation the fnding o the study conclude that the

conventional banks awareness regarding risk mitigation approaches are

more than that o the Islamic banks. Islamic banks also need awareness

regarding approaches o risk mitigation. They are not aware actually

otherwise Islamic banks use the risk mitigation approaches more than that o

the conventional banks. Islamic banks are not that much aware about risk

mitigation techni!ues also as compared to conventional banks but the

Islamic banks using level o risk mitigation techni!ues is more than that o

conventional banks which show that Islamic banks need high awareness

about all these mitigation techni!ues. The Islamic banks management is

more highly positive towards risk management practice and on the other

hand conventional banks management attitude are not that much highly

positive toward risk management practices like Islamic banks. which shows

that management o Islamic banks want to manage their practices o risk but

they need awareness and or the need o such awareness they need !ualifed

sta' and on the other hand conventional banks management need to ocus

also on the practice o risk management or the survival in the market.

3A


38/54

Re4e/ence!

(bdullah# (.# E 6han# (. O. n.d.4. +i!uidity Risk 1anagement ( omparative

;:>>>333

(shra# I. n.d.4. F5amining the prudence o Islamic banks( risk management

perspective# ;).

arey# ( 2::;# *F'ective risk management in fnancial institutionsL the

Turnbull approach-# alance .

Fspan# . $e. 2::24. redit Risk in Two Institutional Regimes L


39/54

,assan# (. 2::=4. Risk management practices o Islamic banks o runei

$arussalam. The Journal of Risk Finance# ;:;4# 233>.

doiL;:.;;:AQ;72?7=):=;:=2))>2

,ussain# ,. (.# E (lB(Kmi# D. 2:;24. Risk management practices o

conventional and Islamic banks in ahrain. The Journal of Risk Finance#

;334# 2;723=. doiL;:.;;:AQ;72?7=);2;;22=2))

Ismat# .# ,u!# (.# (0ad# (. 6.# ERahman# (. n.d.4 2:;:. Risk 1anagement in

anksB( omparative


40/54

etmore# D.+. 2::)4# *Panel data# li!uidity risk# and increasing loansBtoBcor

deposits ratio o large commercial bank holding companies-# (merican

usiness Review# ol. 22 8o. 2# pp. ==B;:>

ang# (.T. E77BA.

Anne?1/e 7 :1e!0onn-0/e

R0!k M-n-gemen com.-/0!on o4 I!l-m0c -nd Con2en0on-l 0n

P-k0!-n

-0n-3 A!04 S0dd0=10 @S1m-0/-Al-4

C05 %n02e/!05 O4 Sc0ence And In4o/m-0on Tec,nolog5 Pe!,-w-/&

:1e!0onn-0/e

Re!.onden N-me$

Re!.onden De!0gn-0on$

);


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Re!.onden Com.-n5$

)2


42/54

:1e!0onn-0/e

:1e!0on #7-$ Aw-/ene!! o4 d0


43/54

urrenc

y Riske4 Perorm

anceQ

/peratio

nal Risk

U U U U U U U U U U

4 Fnviron

mental

Risk

U U U U U U U U U U

g4 Rate o

Return

Risk

U U U U U U U U U U

h4


44/54

:1e!0on ($ Conce/nedne!! o4 ,e /e!.onden! /eg-/d0ng 2-/0o1!

5.e! o4 /0!k!

,ighly

oncerned

/nly

oncerned

8eutral 8ot

oncerned

8ot at

oncernedIsla

mic

onven

tional

Isla

mic

onven

tional

Isla

mic

onven

tional

Isla

mic

onven

tional

Isla

mic

onv

tionaK4 redit

RiskQ

Investm

ent Risk

U U U U U U U U U U

k4 +i!uidity

Risk

U U U U U U U U U U

l4 Interest

Rate

Risk

U U U U U U U U U U

m4%oreign

F5changeQ

urrenc

y Risk

U U U U U U U U U U

n4 Perorm

anceQ

/peratio

nal Risk

U U U U U U U U U U

o4 Fnviron

mental

Risk

U U U U U U U U U U

p4 Rate o

Return

Risk

U U U U U U U U U U

)7


45/54

!4


46/54

:1e!0on )7-$ Aw-/ene!! o4 ,e /e!.onden! o4 ,e /0!k

0den06c-0on ec,n0=1e! -nd me-!1/emen le2el T0ck o/ c/o!!

R0!k Tec,n0=1e! I!l-m0c Con2en0on-la4 Inspection by the bank risk

manager

U U

b4 (udits or physical inspection U Uc4 %inancial statement analysis U Ud4 Risk survey U Ue4 Process analysis U U4


47/54

l

inspecti

onc4 %inanci

al

statem

ent

analysis

U U U U U U U U U U

d4 Risk

survey

U U U U U U U U U U

e4 Process

analysis

U U U U U U U U U U

4


48/54

:1e!0on +7-$ %!e o4 /0!k m-n-gemen ec,n0=1e!

M-n-gemen Tec,n0=1e! I!l-m0c Con2en0on-lredit Ratings U UCap (nalysis U U


49/54

e4 1aturi

ty

1atchi

ng

U U U U U U U U U U

4 Farnin

g at

risk

U U U U U U U U U U

g4 alue

at risk

U U U U U U U U U U

h4


50/54

:1e!0on 7-$ R0!k m00g-0on -../o-c,e!

M-n-gemen Tec,n0=1e! I!l-m0c Con2en0on-lRisk may be avoided U URisk may be retained U U

Risk may be transerred U URisk may be shared U URisk may be reduced U U

:1e!0on 73$ Le2el o4 -cce.-nce o4 2-/0o1! /0!k m00g-0on

-../o-c,e!

,ighly agreed /nly agreed 8eutral $isagreed ,ighly

$isagreedIsla

mic

onvent

ional

Isla

mic

onvent

ional

Isla

mic

onvent

ional

Isla

mic

onvent

ional

Isla

mic

onv

ionalRisk

may

be

avoide

d

U U U U U U U U U U

Risk

may

be

retaine

d

U U U U U U U U U U

Risk

may

be

transe

rred

U U U U U U U U U U

Risk

may

be

shared

U U U U U U U U U U

7;


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Risk

may

be

reduce

d

U U U U U U U U U U

:1e!0on 7-$ Aw-/ene!! o4 /e!.onden! -3o1 /0!k m00g-0on

ec,n0=1e!

I!l-m0c Con2en0on-lollateral (rrangement U UThird party enhancement U U

+oan loss reserves U U/n balance sheet netting U UCuarantees U UParallel contracts U U/ver the ounter derivatives U U

72


52/54

:1e!0on 73$ Le2el o4 1!0ng !.ec06c /0!k m00g-0on ec,n0=1e!

,ighly used /nly used 8eutral 8otB used 8ot at all uIsla

mic

onvent

ional

Isla

mic

onvent

ional

Isla

mic

onvent

ional

Isla

mic

onvent

ional

Isla

mic

onv

ionalollater

al

(rrange

ment

U U U U U U U U U U

Third

party

enhance

ment

U U U U U U U U U U

+oan

loss

reserves

U U U U U U U U U U

/n

balance

sheet

netting

U U U U U U U U U U

Cuarant

ees

U U U U U U U U U U

Parallel

contract

s

U U U U U U U U U U

/ver the

ounter

derivativ

es

U U U U U U U U U U

:1e!0on $ A01de o4 M-n-gemen ow-/d! /0!k m-n-gemen

./-c0ce!

,ighly Positive /nly Positive 8eutral 8egative ,ighly

73


53/54

8egativeIsla

mic

onvent

ional

Isla

mic

onvent

ional

Isla

mic

onvent

ional

Isla

mic

onvent

ional

Isla

mic

onv

ionalredit

Risk

U U U U U U U U U U

+i!uidit

y Risk

U U U U U U U U U U

Interest

Rate

Risk

U U U U U U U U U U

%oreign

F5chan

ge Risk

U U U U U U U U U U

Perorm

ance

Risk

U U U U U U U U U U

7)


54/54

revised thesis data

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