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Table of Contents
List of Tables......................................................................................................................................... iii List of Figures .........................................................................................................................................v Abbreviation List...............................................................................................................................viii Executive Summary..............................................................................................................................1 1. Introduction .......................................................................................................................................5 2. Recent Global Trends in Banking Regulation and Supervision.......................................8 3. A Snapshot of the Banking Sector in the Selected OIC Member Countries ............... 16 3.1 Banking Sector and Macroeconomic Developments in OIC Member Countries ........................ 16 3.1.1 Macroeconomic Developments in OIC Member Countries: A Comparative Analysis.......... 16 3.1.2 Linkage between Real and the Financial Sector in the OIC Countries ........................................ 17 3.1.2 Banking Capital in Selected OIC Countries ............................................................................................. 26 3.1.3 Credit Risk in Selected OIC Countries ....................................................................................................... 30 3.1.4 Profitability of the Banking Sector in Selected OIC Countries ....................................................... 32 3.1.5 Liquidity Risk and Basel III in Selected OIC Countries ...................................................................... 34 3.1.6 Leverage Ratios in Selected OIC Countries............................................................................................. 35 4. Banking Sector Supervision in Selected OIC Countries ................................................... 38 4. 1 Core Principles....................................................................................................................................................... 38 4.2 Analyzing the Supervisory Mechanism for the Selected OIC Member States ............................. 39 4.2.1 Scope of Bank Activities and Financial Conglomerate Variables .................................................. 40 4.2.2 Capital Regulations............................................................................................................................................ 44 4.2.3 Official Supervisory Power ............................................................................................................................ 46 4.2.4 Private Monitoring and External Governance....................................................................................... 50 4.2.5 Restrictions on Entry into Banking Sector.............................................................................................. 53 4.2.6 Deposit Insurance Schemes........................................................................................................................... 55 4.2.7 Selected Responses from 2011 Survey: Comparison of OIC Countries, EU-27 and US....... 57 4.2.8 Concluding Remarks......................................................................................................................................... 59 5. Regulatory and Supervisory Challenges of Islamic Banking after Basel III ............. 66 5.1 Capital in Islamic Banking.................................................................................................................................. 68 5.2 Credit Risk in Islamic Banking ......................................................................................................................... 70 5.3 Leverage Ratio Requirement in Islamic Banking .................................................................................... 71 5.4 Profitability in Islamic Banking ....................................................................................................................... 73 5.5 Liquidity Risk in Islamic Banking ................................................................................................................... 73