Islamic finance in Europe (123)

Continuation

Capital structure risk

Both:

-      Institutions Offering Islamic Financial Services;

-      and its conventional counterpart

face capital structure risk.

Capital structure risk refers to how a firm finances its:

-      overall operations;

-      and growth

by using different sources of funds.

Both types of institutions use a combination of debt, of which:

-      short;

-      and long-term

also equity, of which:

-      common equity;

-      and preferred equity

for funding.

From the research paper of European Central Bank

(Authors: F.Mauro, P.Caristi, S.Couderc, A.D.Maria, L.Ho, B.K.Grewal, S.Masciantonio, S. Ongena and S.Zaher)