Book contents
- Frontmatter
- Contents
- Introduction
- 1 Islamic Banks and Financial Stability: Further Evidence
- 2 A Comparative Analysis of Financial Stability in Islamic and Commercial Banks of the GCC Region
- 3 Financial Stability of Islamic and Conventional Banks in Saudi Arabia: Evidence using Pooled and Panel Models
- 4 Predicting Banking Distress in GCC Countries Using the Emerging Market z-Score Model: A Comparative Study
- 5 Mapping the Perceptions on Risk Exposure and Practices in Islamic Banks and Financial Institutions: A Survey Analysis
- 6 Risk Aspects of GCC Countries Compared to Developed and Emerging Markets: Evidence from Islamic and Non-Islamic Indices
- 7 An Analysis of Value at Risk in the GCC Islamic Banks
- 8 Credit Risk and Capital Structure of Islamic Banks in GCC Countries
- 9 Displaced Commercial Risk (DCR) and Value of Alpha (α %) for Islamic Banks in Bahrain
- 10 The Development of Islamic Securitization in the GCC Countries to Support Housing Finance Markets: An Assessment of Markets, Regulations and Policies
- 11 What Determines Islamic Financial Development? Empirical Evidence from GCC Countries
- 12 Do Islamic Banks Matter for Growth in GCC Countries? A Dynamic Panel Data Analysis
- 13 What Factors Are Affecting the Development of Islamic Financial Institutions in the GCC?
- Glossary of Arabic Terms in Islamic Finance
- About the Contributors
2 - A Comparative Analysis of Financial Stability in Islamic and Commercial Banks of the GCC Region
Published online by Cambridge University Press: 25 September 2025
Book contents
- Frontmatter
- Contents
- Introduction
- 1 Islamic Banks and Financial Stability: Further Evidence
- 2 A Comparative Analysis of Financial Stability in Islamic and Commercial Banks of the GCC Region
- 3 Financial Stability of Islamic and Conventional Banks in Saudi Arabia: Evidence using Pooled and Panel Models
- 4 Predicting Banking Distress in GCC Countries Using the Emerging Market z-Score Model: A Comparative Study
- 5 Mapping the Perceptions on Risk Exposure and Practices in Islamic Banks and Financial Institutions: A Survey Analysis
- 6 Risk Aspects of GCC Countries Compared to Developed and Emerging Markets: Evidence from Islamic and Non-Islamic Indices
- 7 An Analysis of Value at Risk in the GCC Islamic Banks
- 8 Credit Risk and Capital Structure of Islamic Banks in GCC Countries
- 9 Displaced Commercial Risk (DCR) and Value of Alpha (α %) for Islamic Banks in Bahrain
- 10 The Development of Islamic Securitization in the GCC Countries to Support Housing Finance Markets: An Assessment of Markets, Regulations and Policies
- 11 What Determines Islamic Financial Development? Empirical Evidence from GCC Countries
- 12 Do Islamic Banks Matter for Growth in GCC Countries? A Dynamic Panel Data Analysis
- 13 What Factors Are Affecting the Development of Islamic Financial Institutions in the GCC?
- Glossary of Arabic Terms in Islamic Finance
- About the Contributors
Summary
1. Introduction
The Global Financial Crisis (GFC) has been considered the most severe world financial and economic crisis in history. It has highlighted the fragility of the global finance system, leading to uneasy feelings that there is an urgent need to fundamentally re-think how fınancial systems are functioning, and how they are regulated. The GFC has also provoked the financial challenges that a new architecture was needed to re-shape the financial system with an effective innovation rather than some make-ups (Chapra, 2008). Islamic finance may be the architecture that has ability to overcome the weaknesses of the financial system, contributing to the minimisation of the severity and frequency of financial crises. There has, however, been a lack of consensus on the role of Islamic finance on financial stability (Hassan and Dridi, 2010). According to Moody’s, Islamic financial institutions in the GCC region showed strong resilience during the GFC turmoil, however, they are not risk-immune emanating from lack of liquid assets and Islamic interbank market. The impact immediate on Islamic banking was relatively less since it has a ban on interest and a lack of structured products preventing it from investing in assets that turned toxic for conventional banks (Bloom Invest Bank, 2009).
In the period following the GFC, it appears that the global expansion of Islamic finance continued, and its development remained dynamic (IFSB, 2010). Its profitability jumped by 17 per cent yearly-on-yearly bases in the third-quarter of 2011 (Islamic Finance Arabia, 2011). On the other hand, The Analytical Report on Islamic Banks reported that the year 2009 was one of the hardest years in the GCC region demonstrating defaults by large corporations such as the Saad and Gosabi Groups, and local crisis such as the Dubai Crisis. According to the fındings of the Report, the financial market in the GCC region was tightened to some extent, causing the deterioration of assets value, resulting in poor earnings and even losses (Islamic Finance in the GCC, 2010).
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- Islamic Finance , pp. 55 - 80Publisher: Gerlach BooksPrint publication year: 2016
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