Practice of profit equalization reserve and investment risk reserve by Islamic banks

Stability of banking system is backbone of any country’s economy. Conventional banking is a prominent banking system and it is well established in both Muslim and non-Muslim countries. Recently, Muslim scholars have suggested Islamic banking which has been widely practiced all over the world. All th...

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Main Authors:	Htay, Sheila Nu Nu, Syed, Ahmed Salman
Format:	Article
Language:	English
Published:	K.A.J Printing Islamabad, Pakistan 2013
Subjects:	HG1501 Banking
Online Access:	http://irep.iium.edu.my/30954/ http://irep.iium.edu.my/30954/1/PRACTICE_OF_PROFIT_EQUALIZATION_RESERVE_AND_INVESTMENT_RISK_RESERVE_BY_ISLAMIC_BANKS.pdf

id	iium-30954
recordtype	eprints
spelling	iium-309542013-07-25T01:21:40Z http://irep.iium.edu.my/30954/ Practice of profit equalization reserve and investment risk reserve by Islamic banks Htay, Sheila Nu Nu Syed, Ahmed Salman HG1501 Banking Stability of banking system is backbone of any country’s economy. Conventional banking is a prominent banking system and it is well established in both Muslim and non-Muslim countries. Recently, Muslim scholars have suggested Islamic banking which has been widely practiced all over the world. All the Islamic banks except in Sudan are operating in the environment whereby the conventional banking has been dominating since a few decades. Although a few countries like Malaysia are facilitating Islamic banks, they are still influenced by the dominated conventional banking. In some scenarios, there are no rules and regulation governing Islamic banks. Islamic institutions such as AAOIFI and IFSB and regulatory bodies like Bank Negara Malaysia come out with some guidelines to ensure that Islamic banks are competitive with conventional banks and the former ones are able to attract the investment account holders (IAHs) as well as to stabilize the whole country banking system. Among the guidelines, the most important guideline is related to the practice of profit equalization reserve and investment risk reserve. Thus, the aim of this paper is to highlight the important role of these reserves and the recommendations provided by Accounting and Auditing Organization for Islamic Financial Institutions (AAOIFI), Islamic Financial Services Board (IFSB) and Bank Negara Malaysia (BNM) on their practices. The guidelines cover how much percentage of profit can be allocated for reserves and the transparent disclosure on this matter. Finally, the Shari’ah resolution by BNM is highlighted. It is expected that this paper will widen the knowledge of all interested parties on Islamic banking practices, especially on these reserves. K.A.J Printing Islamabad, Pakistan 2013-06 Article PeerReviewed application/pdf en http://irep.iium.edu.my/30954/1/PRACTICE_OF_PROFIT_EQUALIZATION_RESERVE_AND_INVESTMENT_RISK_RESERVE_BY_ISLAMIC_BANKS.pdf Htay, Sheila Nu Nu and Syed, Ahmed Salman (2013) Practice of profit equalization reserve and investment risk reserve by Islamic banks. International Journal of Research In Social Sciences, 2 (2). pp. 15-19. ISSN 2307-227X
repository_type	Digital Repository
institution_category	Local University
institution	International Islamic University Malaysia
building	IIUM Repository
collection	Online Access
language	English
topic	HG1501 Banking
spellingShingle	HG1501 Banking Htay, Sheila Nu Nu Syed, Ahmed Salman Practice of profit equalization reserve and investment risk reserve by Islamic banks
description	Stability of banking system is backbone of any country’s economy. Conventional banking is a prominent banking system and it is well established in both Muslim and non-Muslim countries. Recently, Muslim scholars have suggested Islamic banking which has been widely practiced all over the world. All the Islamic banks except in Sudan are operating in the environment whereby the conventional banking has been dominating since a few decades. Although a few countries like Malaysia are facilitating Islamic banks, they are still influenced by the dominated conventional banking. In some scenarios, there are no rules and regulation governing Islamic banks. Islamic institutions such as AAOIFI and IFSB and regulatory bodies like Bank Negara Malaysia come out with some guidelines to ensure that Islamic banks are competitive with conventional banks and the former ones are able to attract the investment account holders (IAHs) as well as to stabilize the whole country banking system. Among the guidelines, the most important guideline is related to the practice of profit equalization reserve and investment risk reserve. Thus, the aim of this paper is to highlight the important role of these reserves and the recommendations provided by Accounting and Auditing Organization for Islamic Financial Institutions (AAOIFI), Islamic Financial Services Board (IFSB) and Bank Negara Malaysia (BNM) on their practices. The guidelines cover how much percentage of profit can be allocated for reserves and the transparent disclosure on this matter. Finally, the Shari’ah resolution by BNM is highlighted. It is expected that this paper will widen the knowledge of all interested parties on Islamic banking practices, especially on these reserves.
format	Article
author	Htay, Sheila Nu Nu Syed, Ahmed Salman
author_facet	Htay, Sheila Nu Nu Syed, Ahmed Salman
author_sort	Htay, Sheila Nu Nu
title	Practice of profit equalization reserve and investment risk reserve by Islamic banks
title_short	Practice of profit equalization reserve and investment risk reserve by Islamic banks
title_full	Practice of profit equalization reserve and investment risk reserve by Islamic banks
title_fullStr	Practice of profit equalization reserve and investment risk reserve by Islamic banks
title_full_unstemmed	Practice of profit equalization reserve and investment risk reserve by Islamic banks
title_sort	practice of profit equalization reserve and investment risk reserve by islamic banks
publisher	K.A.J Printing Islamabad, Pakistan
publishDate	2013
url	http://irep.iium.edu.my/30954/ http://irep.iium.edu.my/30954/1/PRACTICE_OF_PROFIT_EQUALIZATION_RESERVE_AND_INVESTMENT_RISK_RESERVE_BY_ISLAMIC_BANKS.pdf
first_indexed	2023-09-18T20:45:11Z
last_indexed	2023-09-18T20:45:11Z
_version_	1777409627867054080

Practice of profit equalization reserve and investment risk reserve by Islamic banks

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