Basel Iii: Impact and Challenges to Islamic Financial Institutions: Evidence of Pakistan and Malaysia

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Bibliographic Information
Journal Grassroots
Title Basel Iii: Impact and Challenges to Islamic Financial Institutions: Evidence of Pakistan and Malaysia
Author(s) Talpur, Arifa Bano, Kamleshwer Lohana, Zareen Khan Rind
Volume 54
Issue 2
Year 2020
Pages -
Full Text Crystal Clear mimetype pdf.png
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Keywords Basel Iii, Islamic Banking, Islamic Financial Services Board (Ifsb) , Financial Stability, Shari’Ah Compliance.
Chicago 16th Talpur, Arifa Bano, Kamleshwer Lohana, Zareen Khan Rind. "Basel Iii: Impact and Challenges to Islamic Financial Institutions: Evidence of Pakistan and Malaysia." Grassroots 54, no. 2 (2020).
APA 6th Talpur, A. B., Lohana, K., Rind, Z. K. (2020). Basel Iii: Impact and Challenges to Islamic Financial Institutions: Evidence of Pakistan and Malaysia. Grassroots, 54(2).
MHRA Talpur, Arifa Bano, Kamleshwer Lohana, Zareen Khan Rind. 2020. 'Basel Iii: Impact and Challenges to Islamic Financial Institutions: Evidence of Pakistan and Malaysia', Grassroots, 54.
MLA Talpur, Arifa Bano, Kamleshwer Lohana, Zareen Khan Rind. "Basel Iii: Impact and Challenges to Islamic Financial Institutions: Evidence of Pakistan and Malaysia." Grassroots 54.2 (2020). Print.
Harvard TALPUR, A. B., LOHANA, K., RIND, Z. K. 2020. Basel Iii: Impact and Challenges to Islamic Financial Institutions: Evidence of Pakistan and Malaysia. Grassroots, 54.

Abstract

The global financial crises 2007 bring about the current banking regulations which stood inadequate to avoid banks from taking in unnecessary risk actions. Therefore, Bank for International Settlement (BIS) and G-20 leaders endorsed a new international standard of banking regulations by revising previous Basel II rule, introduced in 2004, into Basel III in late 2010, so as to enhance the quality including quantity of capital, leverage ratio and liquidity standards, which has become a challenge for nationals to implement these strict reforms under their existing banking system. Parallel with the conventional banking system, for which the Basel Committee formulated Basel framework, Islamic banking introduced in early 1977 to 1980 in Pakistan in response to the decision by the Shariat Bench of Supreme Court, necessitates that the financial system be transformed to operate in conformity with sharia. The State Bank of Pakistan (SBP) and Bank Negara Malaysia are the regulator of Islamic banks and full member of IFSB. The Islamic Financial Services Board (IFSB) established in 2002 in Malaysia as an international standard-setting organization to enforce the international regulatory and supervisory guidelines for Islamic financial organizations along with other standard setting bodies such as AAOIFI and ISDB to achieve this objective. The IFSB promotes the stability and soundness of the Islamic financial institutions by issuing guiding standards and prudential regulations for the industry, The IFSB applied Basel standards in the context of Islamic banks and its operating models. This paper critically evaluates Islamic financial institution’s regulatory and supervisory structures particularly for Pakistan and Malaysia and examines financial position after implementing Basel Accord rules. Study suggests a positive impact in case of both countries.

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