Evaluation of the importance of capital adequacy standard in Islamic banks in the light of the principle of risk sharing for investment deposits

Abstract

The capital adequacy standard is the fundamental pillar of the Basel agreements in prudential banking supervision. It is a standard based on the capital adequacy of commercial banks to withstand various risks faced by their assets. This is built on the guarantee base provided by the traditional banking system for deposits.
On the other hand, Islamic banking emerged based on the principle of risk-sharing in both assets and liabilities. This is clearly manifested in investment deposits, which represent capita directed towards investment, where depositors bear the consequences of investment results, whether losses or profits. These deposits are not transformed into capital according to the principles of Mudarabah contract. The aim of the research is to analyze the financial solvency of Islamic banks and compare their requirements with the capital adequacy standard in order to assess its practical importance for Islamic banks.