Improving Banking Supervisory Mechanisms
In the OIC Member Countries
69
Figure 44: Islamic Banking Total Capital Ratio
Source: KFHR
Figure 45: Islamic Banking Common Equity to Total Asset
Source: KFHR
- Capital Definition under Islamic Banking and Basel III
The definition of capital under Islamic banking is rather different than it is under conventional
banking. In Islamic banking, capital is essentially compounded of common equity (and rarely of
Tier 2 products). On this point, Basel III clearly has a positive impact in terms of
competitiveness for Islamic banks. Our analysis also supports this assertion, since many of the
selected OIC member states have almost all of their capital in the form of common equity,
which is presented in Figure 46. Almost all countries hold 100% of their capital in the form of
0
10
20
30
40
50
60
70
80
UAE MALAYSIA SAUDI ARABIA TURKEY PAKISTAN INDONESIA
Islamic Banking Total Capital Ratio
2008
2009
2010
2011
2012
2013
0
0,05
0,1
0,15
0,2
0,25
0,3
UAE MALAYSIA SAUDI ARABIA TURKEY PAKISTAN INDONESIA
Islamic Banking Common Equity/Total Asset
2008
2009
2010
2011
2012
2013