Challenges in Implementation of Capital Adequacy Guidelines in Bahraini Islamic Banks
Volume 6, Issue 1 Husham Saeed Alawsie
Published online: 28 February 2020 Article Views: 25
Abstract
This paper aims to shed light on challenges and issues faced by Bahraini Islamic banks about the capital adequacy guidelines. In Muslim countries, ever-increasing Islamic financial activities, including participation, equity, and ownership, have played an important role in bringing Islamic banking and making financial instruments more attractive. In this study, the role and implementation of Capital Adequacy Ratio (CAR) were critically examined while viewing the gaps it has failed to fill to make Islamic banking more successful in Bahrain. In this study, the qualitative method was used. Both primary and secondary sources were used to collect data for this research. This research was theoretical exploratory, and explanatory in nature. The research concluded that the protection of depositors and safeguarding assets is the key role of any managerial financial body. For internationally active banks, capital adequacy recommendations are set by Basel II Accord’s Pillar 1. Sources of funds of a conventional bank are disregarded by the proposed guidelines in the Islamic banking system of Bahrain, and it also evaluates the risks of its actions that arise from the funds’ uses. The study contributes by shedding light on the challenges and issues that Bahraini Islamic banks face when it comes to capital adequacy guidelines.
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To Cite this article
Alawsi, H. S. (2020). Challenges in implementation of capital adequacy guidelines in Bahraini Islamic banks. International Journal of Business and Administrative Studies, 6(1), 1-8. doi: https://dx.doi.org/10.20469/ijbas.6.10001-1