The displaced commercial risk and Islamic banks

  • SALMA DRISSI ENCG Agadir, University Ibn Zohr (Morocco)
  • Khadija ANGADE ENCG Agadir, University Ibn Zohr (Morocco)
Keywords: Islamic banks, risk, participatory investment accounts, competition


This Islamic Finance has attracted an ever-increasing interest over the last forty years and has undergone a remarkable expansion in asset value. Nevertheless, the peculiarity of Islamic financing modes proposed by these institutions may present certain limits in their execution which exposes these banks to risks that emanate from the characteristics of their particular modes of operation. The aim of our article is to analyze the main risk specifically to Islamic financial institutions namely the displaced commercial risk. This risk arises from participatory investment accounts. In other words, this situation occurs when the banks, under pressure from the environment, are forced to give up part of their profits to pay the depositors, in order to prevent massive withdrawals that can be translated into a liquidity crisis later. In order to avoid such a situation, Islamic banks highlight income smoothing mechanisms on participatory investment accounts.

Author Biography

SALMA DRISSI, ENCG Agadir, University Ibn Zohr (Morocco)

Laboratory for Entrepreneurship, Finance and Audit (LaREFA)


Aaminou, Mohamed Wail, and Aziz Moutahaddib. "Étude de l’exposition des Banques Islamiques Au Taux D’intérêt et de l’implication sur La Gestion Actif-Passif." European Scientific Journal, ESJ 13, no. 10 (2017).

Abdul Kader, R, and Kok Leong Yap. "The Impact of Interest Rate Changes on Islamic Bank Financing." (2008).

Archer, Simon, and Rifaat Ahmed Abdel Karim. "Profit-Sharing Investment Accounts in Islamic Banks: Regulatory Problems and Possible Solutions." Journal of Banking Regulation 10, no. 4 (2009): 300-06.

Beck, Thorsten, Asli Demirgüç-Kunt, and Ouarda Merrouche. "Islamic Vs. Conventional Banking: Business Model, Efficiency and Stability." Journal of Banking & Finance 37, no. 2 (2013): 433-47.

Cherif, Karim, and Haute Ecole de Gestion de Genève. La Finance Islamique: Analyse Des Produits Financiers Islamiques. Haute école de gestion de Genève (HEG-GE), 2008.

Guéranger, François. Finance Islamique: Une Illustration De La Finance Éthique. Dunod, 2009.

Haron, Sudin, and Norafifah Ahmad. "The Effects of Conventional Interest Rates and Rate of Profit on Funds Deposited with Islamic Banking System in Malaysia." International Journal of Islamic Financial Services 1, no. 4 (2000): 1-7.

Hassoune, A. "La Finance Islamique Dans Le Système Financier International Et Dans La Mondialisation." La finance islamique à la française: un moteur pour l'économie, une alternative éthique (2008).

Iqbal, Munawar, and David T Llewellyn. Islamic Banking and Finance: New Perspectives on Profit Sharing and Risk. Edward Elgar Publishing, 2002.

Jedidia, K Ben. "L'intermédiation Financière Participative Des Banques Islamiques." Etudes en Economie Islamique 6, no. 1 (2012): 17-31.

Kasri, Rahmatina, and Salina Hj Kassim. "Empirical Determinants of Saving in the Islamic Banks: Evidence from Indonesia." (2009).

Martens, André. "La Finance Islamique: Fondements, Théorie Et Réalité." L'Actualité économique 77, no. 4 (2001): 475-98.

Miotti, Luis, and Dominique Plihon. "Libéralisation Financière, Spéculation Et Crises Bancaires." Économie internationale, no. 1 (2001): 3-36.

Nazim, A, and G Bennie. "World Islamic Banking Competitiveness Report 2012–2013." Ernst & Young 2012,(December) (2012).

Reuters, Thomson, and Dinar Standard. "State of the Global Islamic Economy 2014-2015 Report." May, available at: http://halalfocus. net/wp-content/uploads/2015/01/SGIE-Report-2014. pdf (2014).

SECK, Djibril Safi. "Enjeux De L’introduction De La Finance Islamique Dans Les Sociétés Musulmanes Et Non Musulmanes." Les Cahiers de la Finance Islamique: 48.

Sundararajan, Venkataraman. "Issues in Managing Profit Equalization Reserves and Investment Risk Reserves in Islamic Banks." Journal of Islamic Economics, Banking and Finance 4, no. 1 (2008): 1-11.

Toumi, Kaouther, and Jean Laurent Viviani. "Le Risque Lié Aux Comptes D'investissement Participatifs: Un Risque Propre Aux Banques Islamiques." La Revue des Sciences de Gestion, no. 1 (2013): 131-42.

Zainol, Zairy, and Salina Kassim. "An Analysis of Islamic Banks' Exposure to Rate of Return Risk." Journal of Economic Cooperation and Development 31, no. 1 (2010): 59-84.

How to Cite
DRISSI, S., & ANGADE, K. (2018). The displaced commercial risk and Islamic banks. European Journal of Islamic Finance, (9).