Islamic Banking and Financial Crisis: The Case of Pakistan a Qualitaive Approach
Khataw, Nazish (2010) Islamic Banking and Financial Crisis: The Case of Pakistan a Qualitaive Approach. [Dissertation (University of Nottingham only)] (Unpublished)
Since the Credit Crunch of 2007-08, a lot of academic and popular literature has focused on the strengths of Islamic banks in the face of financial crises. It is interesting to find out why the developing countries such as Pakistan weren‟t affected by the financial crisis. This paper explores the theory behind these claims by examining how the Islamic financial system increases market self-discipline by sharing the risks equitably between banks and depositors. It is found that this approach reduces moral hazard, asymmetric information and speculation, as well as reduces the different risks that banks face. This paper also establishes a relationship between risk management and business performance, especially in the face of a financial panic.
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