Regulatory framework for Islamic finance
Generally, the objective of a regulatory framework within which a financial system operates is established for the purpose of protecting the system from abuses that may threaten the stability of financial relations. In doing so, attention is paid to the risk of financial transactions. The risk of any transaction can be managed in three ways. Risk can be transferred, shifted or shared. Depositors transfer their risk to a bank that then transfers it to borrowers. In this case the bank is an intermediary. Risk can be shifted in two different ways. A person shifts the risk of life or health to an insurance company with full knowledge and acquiescence of the latter that accepts the shifted risk for a fee
Regulatory framework , Islamic finance , Risk sharing , Financial transactions
Mirakhor, Abbas. (2014). Regulatory framework for Islamic finance. Islamic Banker Asia, (11), pp. 50-53.
Islamic Banker Asia