Credit risk in Islamic financial products

Measuring credit risk is one of the most important aspects of bank management.Whether Islamic banks have higher or lower credit risk than conventional banks dependson two important elements. First, the nature of credit risk in Islamic financial products.Second, the suitability of credit risk measurement techniques for Islamic banks. Wereview and critically evaluate the available literature relating to the credit risk of Islamicbanks. This enables practitioners and regulators alike to gain a comprehensive awarenessof the nature of credit risk in Islamic banking products from several differentperspectives. We also identify the measurement techniques currently available for Islamicbanks along with the pros and cons of each of the measurement techniques.