EMERGE Research Seminar, Tuesday, 13 August at 12:15 in BSG/17
Tue, 20 Aug 2013 14:58:00 BST
Muftah Fashlom, a first year PGR student at the University of Huddersfield, presented his first year progression report to the EMERGE group about his research titled “Avoiding Systemic Financial Crises: Can Islamic Financial System Contribute?”
There are claims in literature indicating that the Islamic financial system has already weathered the storm of the 2008 systemic financial crisis. Yet, despite these claims about the stability of the Islamic banking system, no empirical studies showing how the Islamic banking sector has dealt with the systemic risk of the 2008 systemic financial crisis were found.
Accordingly, this research proposes to contribute to addressing this gap in literature. The research examines two major elements directly associated with the 2008 systemic financial crisis, namely, systemic risk and financial stability. More specifically, the research compares empirically between Islamic and conventional banking systems in terms of avoiding the systemic risk and maintaining the financial stability during the 2008 systemic financial crisis. In addition, the study endeavours to investigate the possibility of using strategies of the Islamic financial system in avoiding the systemic risk of financial crises in the future.
Secondary data will be collected from banks operating in the Gulf Cooperation Countries (GCC). It is expected that the Z-score will be used to measure the financial stability for the period 2003-2013, and the Absorption Ratio to measure the systemic risk for the period 2007-2013. Panel Data Analysis (the fixed effects model) is also expected to be used to analyse the impact of different variables and to observe if there are any relationships among the outcome variables and predictors of the examined banks. Other analyses are expected to be used if needed for particular purposes (e.g. to verify the results).
