Islamic banking in theory and practice: the experience of Bangladesh

Article Abstract:

Keywords: Banking, Islam, Development, Futures markets, Bangladesh On a theoretical level, equity contracts can be optimal financial instruments when contracts are incomplete with respect to cash flows, but the optimality and use of equity contracts will decrease as the level of agency problems and adverse selection increases within an economy. The paucity of long-term financing and abundance of short-term murabaha type are rational responses on the part of Islamic banks to informational asymmetries in the economic environments in which they operate. The Islamic banks can, however, provide long-term project financing in economies where adverse selection and moral hazard problems are minimal.

Bangladesh, Finance

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Islamic banking in theory and practice: the experience of Bangladesh

Article Abstract:

Islamic Bank Bangladeshi Ltd (IBBL) is a bank that aims to provide long-term financing using instruments that are described as being in adherence with Shariah principles. However, an examination of IBBL's choice of instruments reveals that its financing operations are not entirely consist with Islamic principles of profit-and-loss sharing. Analysis of its IBBL's portfolio shows that most of these operations consist of mark-up financing transactions that are clearly debt instruments that do not adhere to Islamic teachings on interest.

Case studies, Religious aspects, Interest, Interest (Finance), Islamic economics, Islamic Bank Bangladeshi Ltd.

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Bank performance measurement in a developing economy: an application of data envelopment analysis

Article Abstract:

The weakness of banks in Nigeria can be greatly attributed to poor management. Utilization of data envelopmental analysis revealed that poor management of Nigerian banks can be characterized in terms of excessive credit and liquidity risk, poor loan quality and sluggish ability to produce capital internally. Commercial banks' expansion of powers due to deregulation are found to be risky to the system's safety since it tends to exert heavier demands on the regulatory/supervisory authorities.

Data envelopment analysis, Nigeria

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