The paper demonstrates the allocation of risk in Islamic banking and shows that in Islamic banking as risks are carried by the owner of funds and are not transmitted to other counterpart, large part of risks are born by depositors that makes financial system more stable. Paper also demonstrates...

We present a banking model with imperfect competition in which borrowers’ access to credit is improved when banks are able to transfer credit risks. However, the market for credit risk transfer (CRT) works smoothly only if the quality of loans is public information. If the quality of loans is...

Banks increasingly recognize the need to measure and manage the credit risk of their loans on a portfolio basis. We address the subportfolio "middle market". Due to their specific lending policy for this market segment it is an important task for banks to systematically identify regional and...