Market discipline in Islamic banks using the profit sharing investment accounts
Market discipline is one of the main pillars for stability and resiliency in banking system (Basel II, 2004).The mechanism of market discipline primarily relies on the role of depositors who receive timely information and act accordingly through their respective accounts. Empirical evidence shows the presence of market discipline, whereby non-insured depositors react to risk factors of the bank accordingly either by withdrawing their deposit (quantity mechanism model) or demanding higher return (price mechanism model), although there is an interactive relation between the both mechanisms (interactive dynamic model). In tandem with conventional banking system, Islamic banking also emphasize on market discipline, signified by the global standard number 4 issued by Islamic Financial Services Board in 2007 ...
Market discipline , Islamic banking , Stability , Profit Sharing Investment Account (PSIA)
Alaeddin, Omar. (2015). Market discipline in Islamic banks using the profit sharing investment accounts (Doctoral dissertation). INCEIF, Kuala Lumpur. Retrieved from https://ikr.inceif.org/handle/INCEIF/2766