Islamic finance in Europe (162)

Continuation

4.2 STABILITY OF DEPOSITS

Religious people may be more risk-averse than others.

(Osoba, 2003; Hilary and Hui, 2010)

Hence, depositors of Islamic banks may be more watchful of their banks’ performance.

They demonstrate a greater willingness to withdraw their deposits than the depositors of conventional banks.

Alternatively, Islamic bank depositors may show greater loyalty  towards an Islamic bank.

This can happen for religious reasons.

They may also be prepared to pay extra for receiving financial services.

Generally, these are compatible with Islamic banks client’s religious beliefs.

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)