The Impact of Credit Risk Management on Islamic Banks in Yemen

Hussein Mussed Rageh Al-Arasi

doi:doi:10.11648/j.ajmse.20210606.16

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The Impact of Credit Risk Management on Islamic Banks in Yemen

Hussein Mussed Rageh Al-Arasi

Published in American Journal of Management Science and Engineering (Volume 6, Issue 6)

Received: 3 June 2021 Accepted: 24 June 2021 Published: 15 December 2021

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Abstract

The study aimed to compare credit risk management processes between conventional and Islamic banks in Yemen. The results of the study were obtained through the financial analysis of credit risk in conventional and Islamic banks for the period 2009-2016, expressed in classified loans and provision for doubtful debts. The results of the study showed that Islamic banks are more sensitive to credit risks, the study recommend that the bank regularly identifies the risks individually and thus develops a strategy to confront these risks. The risks are identified regularly and effectively through a comprehensive risk management system through which all processes, tools, resources and responsibilities required to ensure effective risk management are identified. That each bank has an independent committee called the Risk Management Committee concerned with preparing the general policy or the competent department for risk management to implement the policies and monitor and measure risks periodically and establishing a specific system for measuring and controlling risks in each bank and determining the prudential ceilings for credit and liquidity. Using modern information systems to manage risks and set appropriate safety controls for them. The necessity of having an independent internal audit unit in banks that reports directly to the bank’s board of directors and reviews all of the bank’s business, including risk management.

Published in	American Journal of Management Science and Engineering (Volume 6, Issue 6)
DOI	10.11648/j.ajmse.20210606.16
Page(s)	218-223
Creative Commons	This is an Open Access article, distributed under the terms of the Creative Commons Attribution 4.0 International License (http://creativecommons.org/licenses/by/4.0/), which permits unrestricted use, distribution and reproduction in any medium or format, provided the original work is properly cited.
Copyright	Copyright © The Author(s), 2021. Published by Science Publishing Group

Keywords

Credit Risk, Islamic Banks, Conventional Banks

References

[1]	Greuning, H. and Bratanovic. Analyzing and Managing Banking Risk: A Framework for Assessing Corporate Governance and Financial Risk, 2nd ed., The World Bank, Washington, DC, 2003.
[2]	Ahmad Shamiya: Money and Banks, Zahran Foundation, Amman, 1993, p. 238.
[3]	Nafisa Bashry: Credit Management, Open Education Center, Cairo University, 1990, pp. 44-43.
[4]	Nawal Ben Amara: Participating Banking, Reality and Challenges, Forum of the Banking System, Faculty of Humanities and Social Sciences, Hassiba Ben Ali University, Algeria, Chlef, 14/15 December 2004, p. 232.
[5]	Muhammad Zaki Al-Shafi’i: Introduction to Money and Banks, Dar Al-Nahda Al-Arabiya, 1982, p. 232.
[6]	Ayub, M. Understanding Islamic Finance, West Sussex, England: John Wiley & Sons L td, 2007.
[7]	Banks’ Volume 6, Issue 6, volume. (23/5/2004). P. 12-14.
[8]	Salih Taher Zerkan: Financial Analysis and its Impact on Credit Risk, An Applied Study on a Sample of Jordanian Commercial Banks, Journal of Baghdad College of University Economics, Iraq, No. 23, 2009, pg. 468.
[9]	IFSB. Guiding Principles of Risk Management for Institutions (Other Than Insurance Institutions) Offering only Islamic Financial Services, Credit Risk. Kuala Lumpur: Islamic Financial Service Board, 2005.
[10]	Musa Mubarak: Banking Risk Management, 2009, p. 8.
[11]	Sinkey, J. F: Commercial bank financial management, New York: Palgrave Macmillan, 1983.
[12]	Khan, F: How ‘Islamic’ is Islamic Banking?" Journal of Economic Behavior and Organization, 76 (3), (2010), 805-820.
[13]	Hassan MK. and M., Lewi: Handbook of Islamic Banking. Edward Elgar Publishing, Inc, UK, 2007.
[14]	Compiled from annual reports of traditional and Islamic banks in Yemen. 2009-2016.
[15]	Central Bank reports, General Administration of Banking Supervision 2009-2016.

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APA Style

Hussein Mussed Rageh Al-Arasi. (2021). The Impact of Credit Risk Management on Islamic Banks in Yemen. American Journal of Management Science and Engineering, 6(6), 218-223. https://doi.org/10.11648/j.ajmse.20210606.16

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ACS Style

Hussein Mussed Rageh Al-Arasi. The Impact of Credit Risk Management on Islamic Banks in Yemen. Am. J. Manag. Sci. Eng. 2021, 6(6), 218-223. doi: 10.11648/j.ajmse.20210606.16

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AMA Style

Hussein Mussed Rageh Al-Arasi. The Impact of Credit Risk Management on Islamic Banks in Yemen. Am J Manag Sci Eng. 2021;6(6):218-223. doi: 10.11648/j.ajmse.20210606.16

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@article{10.11648/j.ajmse.20210606.16,
  author = {Hussein Mussed Rageh Al-Arasi},
  title = {The Impact of Credit Risk Management on Islamic Banks in Yemen},
  journal = {American Journal of Management Science and Engineering},
  volume = {6},
  number = {6},
  pages = {218-223},
  doi = {10.11648/j.ajmse.20210606.16},
  url = {https://doi.org/10.11648/j.ajmse.20210606.16},
  eprint = {https://article.sciencepublishinggroup.com/pdf/10.11648.j.ajmse.20210606.16},
  abstract = {The study aimed to compare credit risk management processes between conventional and Islamic banks in Yemen. The results of the study were obtained through the financial analysis of credit risk in conventional and Islamic banks for the period 2009-2016, expressed in classified loans and provision for doubtful debts. The results of the study showed that Islamic banks are more sensitive to credit risks, the study recommend that the bank regularly identifies the risks individually and thus develops a strategy to confront these risks. The risks are identified regularly and effectively through a comprehensive risk management system through which all processes, tools, resources and responsibilities required to ensure effective risk management are identified. That each bank has an independent committee called the Risk Management Committee concerned with preparing the general policy or the competent department for risk management to implement the policies and monitor and measure risks periodically and establishing a specific system for measuring and controlling risks in each bank and determining the prudential ceilings for credit and liquidity. Using modern information systems to manage risks and set appropriate safety controls for them. The necessity of having an independent internal audit unit in banks that reports directly to the bank’s board of directors and reviews all of the bank’s business, including risk management.},
 year = {2021}
}

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TY  - JOUR
T1  - The Impact of Credit Risk Management on Islamic Banks in Yemen
AU  - Hussein Mussed Rageh Al-Arasi
Y1  - 2021/12/15
PY  - 2021
N1  - https://doi.org/10.11648/j.ajmse.20210606.16
DO  - 10.11648/j.ajmse.20210606.16
T2  - American Journal of Management Science and Engineering
JF  - American Journal of Management Science and Engineering
JO  - American Journal of Management Science and Engineering
SP  - 218
EP  - 223
PB  - Science Publishing Group
SN  - 2575-1379
UR  - https://doi.org/10.11648/j.ajmse.20210606.16
AB  - The study aimed to compare credit risk management processes between conventional and Islamic banks in Yemen. The results of the study were obtained through the financial analysis of credit risk in conventional and Islamic banks for the period 2009-2016, expressed in classified loans and provision for doubtful debts. The results of the study showed that Islamic banks are more sensitive to credit risks, the study recommend that the bank regularly identifies the risks individually and thus develops a strategy to confront these risks. The risks are identified regularly and effectively through a comprehensive risk management system through which all processes, tools, resources and responsibilities required to ensure effective risk management are identified. That each bank has an independent committee called the Risk Management Committee concerned with preparing the general policy or the competent department for risk management to implement the policies and monitor and measure risks periodically and establishing a specific system for measuring and controlling risks in each bank and determining the prudential ceilings for credit and liquidity. Using modern information systems to manage risks and set appropriate safety controls for them. The necessity of having an independent internal audit unit in banks that reports directly to the bank’s board of directors and reviews all of the bank’s business, including risk management.
VL  - 6
IS  - 6
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Author Information

Hussein Mussed Rageh Al-Arasi

Department of Commerce, Commerce and Management Collage, Dr. Babasaheb Ambedkar Marthwada University, Aurangabad, India

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APA Style

Hussein Mussed Rageh Al-Arasi. (2021). The Impact of Credit Risk Management on Islamic Banks in Yemen. American Journal of Management Science and Engineering, 6(6), 218-223. https://doi.org/10.11648/j.ajmse.20210606.16

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ACS Style

Hussein Mussed Rageh Al-Arasi. The Impact of Credit Risk Management on Islamic Banks in Yemen. Am. J. Manag. Sci. Eng. 2021, 6(6), 218-223. doi: 10.11648/j.ajmse.20210606.16

Copy | Download

AMA Style

Hussein Mussed Rageh Al-Arasi. The Impact of Credit Risk Management on Islamic Banks in Yemen. Am J Manag Sci Eng. 2021;6(6):218-223. doi: 10.11648/j.ajmse.20210606.16

Copy | Download

@article{10.11648/j.ajmse.20210606.16,
  author = {Hussein Mussed Rageh Al-Arasi},
  title = {The Impact of Credit Risk Management on Islamic Banks in Yemen},
  journal = {American Journal of Management Science and Engineering},
  volume = {6},
  number = {6},
  pages = {218-223},
  doi = {10.11648/j.ajmse.20210606.16},
  url = {https://doi.org/10.11648/j.ajmse.20210606.16},
  eprint = {https://article.sciencepublishinggroup.com/pdf/10.11648.j.ajmse.20210606.16},
  abstract = {The study aimed to compare credit risk management processes between conventional and Islamic banks in Yemen. The results of the study were obtained through the financial analysis of credit risk in conventional and Islamic banks for the period 2009-2016, expressed in classified loans and provision for doubtful debts. The results of the study showed that Islamic banks are more sensitive to credit risks, the study recommend that the bank regularly identifies the risks individually and thus develops a strategy to confront these risks. The risks are identified regularly and effectively through a comprehensive risk management system through which all processes, tools, resources and responsibilities required to ensure effective risk management are identified. That each bank has an independent committee called the Risk Management Committee concerned with preparing the general policy or the competent department for risk management to implement the policies and monitor and measure risks periodically and establishing a specific system for measuring and controlling risks in each bank and determining the prudential ceilings for credit and liquidity. Using modern information systems to manage risks and set appropriate safety controls for them. The necessity of having an independent internal audit unit in banks that reports directly to the bank’s board of directors and reviews all of the bank’s business, including risk management.},
 year = {2021}
}

Copy | Download

TY  - JOUR
T1  - The Impact of Credit Risk Management on Islamic Banks in Yemen
AU  - Hussein Mussed Rageh Al-Arasi
Y1  - 2021/12/15
PY  - 2021
N1  - https://doi.org/10.11648/j.ajmse.20210606.16
DO  - 10.11648/j.ajmse.20210606.16
T2  - American Journal of Management Science and Engineering
JF  - American Journal of Management Science and Engineering
JO  - American Journal of Management Science and Engineering
SP  - 218
EP  - 223
PB  - Science Publishing Group
SN  - 2575-1379
UR  - https://doi.org/10.11648/j.ajmse.20210606.16
AB  - The study aimed to compare credit risk management processes between conventional and Islamic banks in Yemen. The results of the study were obtained through the financial analysis of credit risk in conventional and Islamic banks for the period 2009-2016, expressed in classified loans and provision for doubtful debts. The results of the study showed that Islamic banks are more sensitive to credit risks, the study recommend that the bank regularly identifies the risks individually and thus develops a strategy to confront these risks. The risks are identified regularly and effectively through a comprehensive risk management system through which all processes, tools, resources and responsibilities required to ensure effective risk management are identified. That each bank has an independent committee called the Risk Management Committee concerned with preparing the general policy or the competent department for risk management to implement the policies and monitor and measure risks periodically and establishing a specific system for measuring and controlling risks in each bank and determining the prudential ceilings for credit and liquidity. Using modern information systems to manage risks and set appropriate safety controls for them. The necessity of having an independent internal audit unit in banks that reports directly to the bank’s board of directors and reviews all of the bank’s business, including risk management.
VL  - 6
IS  - 6
ER  -

Copy | Download