The paper highlights some of the key issues and gaps in the supervision of Islamic Banks,
and in particular, addresses the supervisory implications of the role of investment account …

Purpose–The aims of this paper are: first, to draw attention to the issues of displaced
commercial risk (DCR) which arise as a result of the risk characteristics of profit‐sharing …

The paper discusses key issues in the measurement and control of risks in Islamic Financial
Services Institutions, particularly the implications of profit sharing investment accounts …

This chapter is concerned with the rationales for the regulation of capital adequacy and their
applicability to Islamic banks. Section 2 examines the rationales for capital adequacy of …

The objective of the research is to quantify the displaced commercial risk (DCR) based on
quantitative finance techniques. We develop an internal model based on the Value-at-risk …

Islamic banks do not pay interest on customers' deposit accounts. Instead, customers' funds
are placed in profit-sharing investment accounts (PSIA). Under this arrangement, the returns …

Islamic banks are exposed to a particular risk that stems from one specific service that they
offer: the collection and management of deposits in the form of unrestricted profit-sharing …

Up until very recently, operational risk was felt to be inherent in all banking operations but
impossible to quantify, difficult to measure even qualitatively, and so subjective in its …

The use of investment risk reserve (IRR) is key to covering potential losses on assets
invested with investment account holders (IAH) funds, and profit equalization reserve (PER) …

Displaced commercial risk is a unique risk applicable to an Islamic bank particularly in a
dual banking environment. Displaced Commercial Risk (DCR) is defined as “the risk arising …