RISK MANAGEMENT IN ISLAMIC FINANCE: A COMPARATIVE STUDY BETWEEN ISLAMIC BANKS AND CONVENTIONAL BANKS IN MENA COUNTRIES

This study investigates the potential risk management and measurement tools in Islamic banks and compares them with conventional banks. It uses a sample of 131 banks in ten countries in MENA area (Saudi Arabia, Qatar, Bahrain, Oman, Kuwait, the United Arab Emirates, Egypt, Jordan, Turkey and Tunisia). The study covers a period of six years from 2006 to 2011. It tries to introduce the concept of Islamic finance and associated risk management. The study covers five types of risks namely: credit risk, liquidity risk, market risk, insolvency risk and interest rate risk. The results vary as the number of risk types is big, however the models used show more significant results in Islamic banks compared with conventional banks which indicate better understanding and practicing of risk management tools in Islamic banking systems